Case Information
*1
[This opinion has been published in
Ohio Official Reports
at
R ITCHEY P RODUCE OMPANY , I NC ., A PPELLEE ,
v.
S TATE OF , D EPARTMENT OF A DMINISTRATIVE ERVICES , A PPELLANT .
[Citе as
Ritchey Produce Co., Inc. v. Ohio Dept. of Adm. Serv
.,
State government—Provisions of R.C. 125.081 requiring that approximately fifteen
percent of state’s purchasing contracts be set aside for competitive bidding by minority business enterprises only are constitutional—Provisions of R.C. 122.71(E) defining “minority business enterprise” with explicit reference to race are constitutional as applied to deny minority-business-enterprise status to business owned and controlled by person of Lebanese ancestry— Ohio’s Minority Business Enterprise Program as it relates to purchasing contracts is constitutional.
1. The provisions of R.C. 125.081 requiring that approximately fifteen percent
of the state’s purchasing contracts be set aside for competitive bidding by minority business enterprises only and the provisions of R.C. 122.71(E) defining “minority business enterprise” with explicit reference to race are constitutional as applied to deny minority-business-enterprise status to a business owned and controlled by a person of Lebanese ancestry.
2. Ohio’s Minority Business Enterprise Program as it relates to the state’s
purchasing contracts is sufficiently narrowly tailored to pass constitutional muster.
(No. 97-2435—Submitted November 10, 1998—Decided April 7, 1999.) A PPEAL from the Court of Appeals for Franklin County, No. 97APE04-567. __________________
This appeal concerns an administrative order issued by the Ohio
Department of Administrative Services (“ODAS”), appellant, denying recertification of appellee, Ritchey Produce Company, Inc., as a minority business enterprise (“MBE”) for purposes of Ohio’s MBE set-aside program. See R.C. 122.71(E)(1), 123.151, and 125.081. The facts of this appeal are as follows. Ohio’s MBE set-aside program mandates that certain percentages of the state’s construction and procurement contracts are to be set aside for competitive bidding by MBEs only. The MBE program for state construction contracts operates in a straightforward manner. From all of the contracts to be awarded by ODAS under R.C. 123.15
and R.C. Chapter 153, the Director of Administrative Services must “select a number of contracts with an aggregate value of approximately five per cent of the total estimated value of contracts to be awarded in the current fiscal year.” R.C. 123.151(C)(1). The director must then “set aside the contracts so selected for bidding by minority business enterprises only.” . To the extent that any state agency other than ODAS is authorized to enter into construction contracts, those agencies are bound by a similar five-percent set-aside requirement. R.C. 123.151(D)(1). The bidding procedures for set-aside contracts are the same as for all other contracts awarded by ODAS under R.C. 123.15 and R.C. Chapter 153 (or by any other state agency), except that only MBEs certified and listed by the Equal Employment Opportunity Coordinator are qualified to bid. R.C. 123.151(C)(1) and 123.151(D)(1). Each contractor awarded a contract is required to “make every effort to ensure that certified minority business subcontractors and materialmen participate in the contract.” R.C. 123.151(C)(2)(a). ODAS may not, however, enter into any contract authorized under R.C. 123.15 or R.C. Chapter 153, including any contract set aside under R.C. 123.151(C)(1), unless the contract contains a provision stipulating that the contractor, to the extent that it subcontracts work, “will award subcontracts totaling no less than five per cent of the total value of the contract to minority businesses certified under division (B) of this section and that the total value of both the materials purchased from minority businesses certified under division (B) of this section and of the subcontracts awarded * * * to such minority businesses will equal at least seven per cent of the total value of the contract; except that in the case of contracts specified in division (A) of section 153.50 of the Revised Code * * * [a different stipulation is required].” R.C. 123.151(C)(2)(b). [1] The same requirements apply in the case of construction contracts that are set aside by state agencies other than ODAS. R.C. 123.151(D)(2). With respect to state procurement contracts for supplies and services, etc., the MBE set-aside program also operates in a straightforward manner. Specifically, from the purchases ODAS is required to make through competitive selection, the director must “select a number of such purchases, the aggregate value of which equals approximately fifteen per cent of the estimated total value of all such purchases to be made in the current fiscal year.” R.C. 125.081(A). The director must then “set aside the purchases selected for competition only by minority business enterprises, as defined in division (E)(1) of section 122.71 of the Revised Code.” Any agency of the state other than ODAS, the legislative and 1. R.C. 123.151(C)(3) sets forth a procedure by which the prime construction contractor can seek a waiver or modification of the minority-participation requirements of R.C. 123.151(C). Specifically, R.C. 123.151(C)(3) provides:
“Where a contractor is unable to agree to the provision required by division (C)(2) of this section because, having made a good faith effort, the contractor is unable to locate qualified minority businesses available to accept subcontracts or sell materials or services, the contractor may apply to the coordinator and the set aside review board created under division (C)(4) of this section for a waiver or modification of the provision. The coordinator shall review the application and shall make a recommendation to the board to allow or disallow the request. After receipt of the coordinator’s recommendation, the board shall review the request. If the board finds that the contractor has made a good faith effort to locate and reach agreement with minority business subcontractors and materialmen or service providers but has been unable to do so due to circumstances beyond the reasonable control of the contractor, it may authorize the contract to include, in lieu of the provision required by division (C)(2) of this section, a provision stipulating a lesser percentage of the total value of the contract to be designated for minority business subcontractors and materialmen or it may waive such provision entirely, or stipulate a higher percentage of services permissible in contracts specified in division (A) of section 153.50 of the Revised Code. If the board does not grant the contractor’s application for waiver or modification, and if the contractor is unable to agree with the provision required by division (C)(2) of this section, the contractor’s bid shall be deemed nonresponsive to the specifications for which the bid was submitted.” judicial branches, boards of elections, and the adjunct general that is authorized to make purchases is likewise bound by a fifteen-percent set-aside requirement. R.C. 125.081(B). The competitive selection procedures for purchases set aside under R.C. 125.081(A) and (B) are the same as for any other purchases made by ODAS, or by a state agency other than ODAS, except that only MBEs certified and listed by the Equal Employment Opportunity Coordinator are qualified to compete. R.C. 125.081(A) and (B). R.C. 123.151(B)(1) provides that “[t]he director of administrative
services shall make rules in accordance with Chapter 119. of the Revised Code establishing procedures by which minority businesses may apply to the equal employment opportunity coordinator for certification as minority business enterprises.” R.C. 123.151(B)(2) provides that the coordinator “shall approve the application of any minority business enterprise that complies with the rules adopted under this division.” Additionally, the statute provides that any person adversely affected by an order of the coordinator denying certification may appeal from the order as provided in R.C. Chapter 119. The statute also requires the coordinator to prepare and maintain a list of certified MBEs. R.C. 122.71(E)(1) defines “[m]inority business enterprise” for
purposes of the MBE program. R.C. 122.71 provides:
“As used in sections 122.71 to 122.83 of the Revised Code: “* * *
“(E)(1) ‘Minority business enterprise’ means an individual, partnership, corporation, or joint venture of any kind that is owned and controlled by United States citizens, residents of Ohio, who are members of one of the following economically disadvantaged groups: Blacks, American Indians, Hispanics, and Orientals.
“(2) ‘Owned and controlled’ means that at least fifty-one per cent of the business, including corporate stock if a corporation, is owned by persons who belong to one or more of the groups set forth in division (E)(1) of this section, and that such owners have control over the management and day-to-day operations of the business and an interest in the capital, assets, and profits and losses of the business proportionate to their percentage of ownership. In order to qualify as a minority business enterprise, a business shall have been owned and controlled by such persons at least one year prior to being awarded a contract pursuant to this section.” Supplementing the statute, a rule promulgated by the Director of
Administrative Services further defines these terms and, among other things, establishes the application and certification requirements for Ohio MBEs. See Ohio Adm.Code 123:2-15-01. The rule requires that “[a]ny minority business enterprise that desires to bid on a contract under division (C)(1) or (D)(1) of section 123.151 of the Revised Code or under division (A) or (B) of section 125.081 of the Revised Code or to be a minority business subcontractor or materialman under division (C)(2) or (D)(2) of section 123.151 of the Revised Code shall first apply with the equal employment opportunity coordinator of the department of administrative services for certification as a minority business enterprise.” Ohio Adm.Code 123:2- 15-01(B). Certification may be granted for a period not exceeding one year and, thus, successful applicants must reapply annually for MBE recertification. Ohio Adm.Code 123:2-15-01(C). The rule defines “minority business enterprise” as “an individual, partnership, corporation, or joint venture of any kind that is owned and controlled by United States citizens, residents of Ohio, who are and have held themselves out as members of the following economically disadvantaged groups: Blacks, American Indians, Hispanics, and Orientals.” Ohio Adm.Code 123:2-15- 01(A). [2] For purposes of the rule, “ ‘Orientals’ means all persons having origins in 2. Ohio Adm.Code 123:2-15-01(A)(6) through (8) define “Blacks,” “American Indians,” and “Hispanics” as follows:
“(6) ‘Blacks’ means all persons having origins in any of the black racial groups of Africa. any of the original people of the Far East, including China, Japan and Southeast Asia.” Ohio Adm.Code 123:2-15-01(A)(9). Nadim F. Ritchey (“Ritchey”) is the sole shareholder of Ritchey
Produce Company, Inc. (“Ritchey Produce”), appellee. Ritchey Produce is a wholesale supplier of fruits and vegetables. Ritchey, who was born in Lebanon, is a naturalized citizen of the United States and is a resident of Ohio. In 1990, Ritchey filed an application seeking MBE certification for Ritchey Produce. On the front page of the application, Ritchey indicated that he is a member of a racial or ethnic group identified as “Oriental.” However, on the second page of the application form, Ritchey stated that his national origin is the country of Lebanon and that he is Lebanese. In August 1991, Ritchey Produce received MBE certification for the twelve-month period beginning August 31, 1991, and was granted recertification as an MBE in each of the three succeeding years. During the period of certification, appellee was awarded an R.C. 125.081(A) set-aside contract by ODAS covering the state’s requirements for fresh fruits and vegetables from July 1995 through September 1997. In 1995, Ritchey filed an application for recertification of Ritchey
Produce as an MBE. The company’s then-current MBE certification was set to expire October 31, 1995. However, during the recertification process, the State Purchasing Office advised the ODAS Equal Opportunity Center that Ritchey is Lebanese and that therefore Ritchey Produce might not have been properly certified as an MBE. Apparently, that information had come to light as a result of concerns “(7) ‘American Indians’ means all persons having origins in any of the original peoples of North America, and who maintain cultural identification through tribal affiliation or community recognition.
“(8) ‘Hispanics’ means all persons of Spanish or Portuguese culture with origins in Mexico, South or Central America or the Caribbean Islands, regardless of race.”
In 1995, the Franklin County Court of Appeals determined that the term “Orientals” in
R.C. 122.71(E)(1) includes businesses owned and controlled by persons with origins in the country
of India or, geographically, the Indian subcontinent.
DLZ Corp. v. Ohio Dept. of Adm. Serv
. (1995),
that Ritchey, the sole owner of Ritchey Produce, was not “Oriental” within the meaning of R.C. 122.71(E)(1). Therefore, the hearing examiner concluded that because Ritchey was not a member of a specific minority group listed in R.C. 122.71(E)(1), appellee Ritchey Produce did not meet the requirements for MBE certification. In April 1996, the Director of Administrative Services adopted the report and recommendation of the hearing examiner and denied the application for recertification of Ritchey Produce as a qualified MBE. Apparently, this action did not affect the contract that Ritchey Produce had previously been awarded by ODAS. Subsequently, appellee filed in the Court of Common Pleas of
Franklin County an R.C. 119.12 appeal from the agency’s final adjudication order. The matter was referred to a magistrate of the court. See Civ.R. 53. On October 21, 1996, the magistrate issued her decision, finding that ODAS’s final adjudication order denying Ritchey Produce’s request for recertification violated the equal protection guarantees of the Fifth and Fourteenth Amendments to the United States Constitution. Specifically, the magistrate considered the provisions of R.C. 125.081(A) (pertaining to purchasing contracts that must be set aside for bidding by MBEs) and the provisions of R.C. 122.71(E)(1) (defining “[m]inority business enterprise”) and stated:
“[ODAS’s] Order was based solely on the interpretation of the statute [R.C.
122.71(E)(1)] that only those four specifically named groups can be minorities for
purposes of the MBE set aside statute [R.C. 125.081]. However, by case law, the
statute has been enlarged to include Asian Indians as Orientals. See [
DLZ Corp. v.
Ohio Dept. of Adm. Serv
. (1995),
“[Ritchey] concedes that he is not Oriental and argues that, instead of focusing on the racial classifications contained within the statutes themselves, that the focus must be on the words ‘economically disadvantaged.’ Ritchey further argues that there should be a rebuttable presumption that the businesses within the named races are economically disadvantaged. * * *
“The United States Supreme Court has recently held that the application of
a statute which is race based must be reviewed with strict scrutiny and must be
narrowly tailored to further a compelling governmental interest.
Adarand
Constructors, Inc. v. Pena
(1995) [
“While it is the opinion of this Magistrate that the law needs to be rewritten to avoid cases such as this one * * *, it can be saved by requiring the EEOC, in the future, to look at economic disadvantage rather than race as the determining factor. Those named races, as suggested in Adarand , supra , could be rebuttably presumed to be disadvantaged.” Accordingly, the magistrate concluded that “the MBE statute as it is
being applied is unconstitutional,” and that the matter should therefore be remanded to ODAS for a determination whether Ritchey Produce is an economically disadvantaged enterprise that “should be recertified under this new strict scrutiny review.” ODAS filed written objections to the decision of the magistrate.
However, despite ODAS’s protests, Judge Daniel T. Hogan of the common pleas court adopted the magistrate’s decision, stating:
“[ODAS] argues that [Ritchey Produce] is not eligible to participate in [an] MBE program because its owner [is] of Lebanese descent. The program is set up to remedy past discrimination by requiring the set aside of public contracts for certain economically disadvantaged groups: namely Blacks, American Indians, Hispanics and Orientals.
“The ODAS argues, at great length, that Mr. Ritchey being Lebanese is not Oriental, and therefore may not participate in the program regardless of ‘economic disadvantage.’
“[Ritchey Produce], on the other hand, argues that the Equal Protection guarantees of the Fifth and Fourteenth Amendments to the United States Constitution prohibit exemptions based on race per se. Instead, for Ohio’s MBE Program to be constitutional, the use of the racial categories must merely represent that these ethnic groups are granted а rebuttable presumption that they are ‘disadvantaged.’ Moreover, ODAS must make individualized case-by-case determinations with respect to whether businesses owned by other racial groups qualify as ‘disadvantaged business enterprises.’ This case-by-case determination without regard to race per se was the administrative procedure in place when [Ritchey Produce] was originally certified as a Minority Business Enterprise in 1990. * * * [Citing a 1992 deposition of former Equal Employment Opportunity Coordinator Booker T. Tall.]
“[ DLZ Corp ., 102 Ohio App.3d 777, 658 N.E.2d 28] was decided upon issues of statutory construction rather than the constitutionality of the MBE program. In that case, the Tenth District Court of Appeals determined that ‘Oriental’ as used in the statute defining eligibility for participation in the MBE set aside program includes people with origins in India.
“Working our way north and west from India we first come to Pakistan, then Iran, then Iraq, then Syria, and finally Lebanon. If Asian Indians are ‘Oriental,’ shall we exclude Pakistanis separated from India only by the Great Indian Desert? And if Pakistanis are ‘Oriental,’ shall we exclude Iranians who share a common border with Pakistan? And if Iran is ‘Oriental,’ shall we exclude Iraq separated from Iran only by the Zagros Mountains? And if Iraq is ‘Oriental,’ shall we exclude Syria, for the Euphrates River flows through both countries? And finally if Syria is ‘Oriental,’ how can its contiguous neighbor Lebanon be anything but ‘Oriental’?
“This Court can think of few things more repugnant to our constitutional system of government than the construction of a statute that would exclude a group of United States citizens and residents of Ohio from a State program, the sole criteri[on] for exclusion being the side of a river, a mountain range, or a desert their ancestor decided to settle.
“For these reasons, as well as the reasons stated in the Magistrate’s opinion, the Court finds that the MBE statute as it is being applied is unconstitutional. This case is REVERSED and it is REMANDED for a determination of whether or not [Ritchey Produce] remains an economically disadvantaged enterprise which should be recertified under new strict scrutiny review.” On appeal, the court of appeals majority found that the racial
classification in R.C. 122.71(E)(1) “appears to be based on the presumption that caucasians and other minority groups are not disadvantaged, socially or economically, but that all members of the listed minority groups are socially and economically disadvantaged.” In this regard, the court of appeals found that the classification was both underinclusive and overinclusive, since “[t]here may be socially and economically disadvantaged business owners who are excluded from the program simply because of their race” and “there may be business owners who are not socially and economically disadvantaged yet eligible to participate in the program simply because they are among the four enumerated minority groups.” Therefore, the court of appeals determined that the MBE program was not “narrowly tailored” to further a compelling governmental interest, and stated that “[w]hile remedying past discrimination may be a compelling interest, we find it hard to envision a situation in which a race-based classification is narrowly tailored.” Additionally, the court of appeals, relying on Adarand , 515 U.S.
200,
{¶ 16} The court of appeals did not decide the question whether Ritchey Produce qualified as an Oriental company, finding that because “the enumerated racial classifications could not constitutionally exclude [Ritchey], it makes no difference whether a Lebanese, such as [Ritchey], would qualify as an oriental.” Accordingly, the court of appeals affirmed the judgment of the trial court, holding that “the state’s MBE program is a race per se classification” and “was unconstitutionally applied to deny [Ritchey] MBE certification.” The court of appeals remanded the cause to ODAS “for further review of [Ritchey’s] application irrespective of race.” Presiding Judge G. Gary Tyack, in a concurring opinion, stated that
he agreed with the decision affirming the judgment of the trial court, but not for the reasons stated by the court of appeals majority. Specifically, Judge Tyack stated that he would have decided the controversy on the sole basis that Ritchey’s Lebanese ancestry qualified him as Oriental and qualified Ritchey Produce for MBE certification. Accordingly, Judge Tyack concluded that there was no need to address the arguments concerning the constitutionality of Ohio’s MBE program. The cause is now before this court pursuant to the allowance of a discretionary appeal.
__________________
Bricker & Eckler L.L.P. , Luther L. Liggett, Jr. , and Kimberly J. Brown ; and
William D. Joseph , for appellee.
Betty D. Montgomery , Attorney General, Judith L. French and Darius N. Kandawalla , Assistant Attorneys General, for appellant.
Squire, Sanders & Dempsey L.L.P. , Frederick R. Nance and Michael W. Kelly , urging affirmance on other grounds for amici curiae , the Ohio Black Legislative Caucus, Senator Jeffrey Johnson and Representatives Otto Beatty, Samuel Britton, Troy Lee James, Peter Lawson Jones, Mark Mallory, Sylvester Patton, C.J. Prentiss, Tom Roberts, Vernon Sykes, Charleta Tavares, and Vermel Whalen.
__________________
D OUGLAS , J . As a preliminary matter, we note that appellee and amici raise a number of arguments that tend to confuse rather than to clarify the issues presented by this appeal. Therefore, it is necessary to dispel some of this confusion before proceeding to the primary issue raised in this appeal, to wit, whether Ohio’s MBE Program, as administratively applied and as written, violates the equal protection guarantees of the Fourteenth Amendment to the United States Constitution. [3]
I In its brief, ODAS correctly notes that racial classifications of the
type set forth in R.C. 122.71(E)(1) must be analyzed under strict scrutiny. The
3. Appellee also argues that Ohio’s MBE Program, as administratively applied, violates the equal
protection component of the
Fifth
Amendment to the United States Constitution. The equal
protection guarantee of the Fifth Amendment is coextensive with that of the Fourteenth. See,
generally,
Adarand Constructors, Inc. v. Pena
(1995),
ODAS’s entire analysis concerning the constitutionality of Ohio’s MBE program raises issues that were neither argued nor decided in the courts below. Specifically, in its merit brief, appellee contends: “The State argues in its first proposition of law the facial validity of its MBE program and the underlying State interests. Accordingly, the State spends an inordinate amount of time arguing its compelling interest for legislating such a program. However, Ritchey Produce never challenged the facial validity of the State’s MBE program and concedes the State’s compelling interest in creating a ‘disadvantaged business enterprise’ program.” In addition, appellee argues that it never challenged the validity of Ohio’s MBE program but “instead challenged how ODAS reversed its policy and decertified Ritchey Produce on race per se .” Appellee concludes, therefore, that “[a]s the lower courts never considered either a record or arguments on the validity of the State’s underlying interest in creating its MBE program, the State improperly raises these issues before this Court,” and ODAS’s first proposition of law should be stricken. We disagree with Ritchey Produce’s claim that ODAS’s first
proposition of law should be stricken. Rather, we find that strict scrutiny requires consideration of the type of issues that have been briefed and argued by ODAS in its first proposition of law. That is, the question whether the MBE program is narrowly tailored to further a compelling governmental interest necessarily requires consideration of the compelling interest that gave rise to the program’s creation, i.e ., the requirements of a compelling interest and narrowly tailored means go hand in hand. Further, appellee’s concession that the state had a compelling interest to enact a disadvantaged business enterprise program underscores the fact that appellee does not fully comprehend the nature and character of Ohio’s MBE program. This fact becomes all the more apparent when appellee’s arguments are considered in detail. Appellee claims that the MBE program, specifically, R.C. 122.71,
“expressly creates a ‘disadvantaged business enterprise’ program.” In connection with this argument, appellee has gone to great lengths in an attempt to convince us that ODAS changed its policy on MBE certifications between the time appellee was originally granted certification in 1991 and the time appellee’s request for recertification was denied in April 1996. According to appellee, “in April 1996, ODAS reversed its course with no change in fact or law, and decertified Ritchey Produce based on the sole criteri[on] that Ritchey Produce racially does not meet the State’s latest definition of ‘Oriental.’ ” Appellee suggests that “[w]hile prior to this time ODAS based MBE determinations upon whether the applicant qualified as ‘socially or economically disadvantaged’ as described in the statute , ODAS unconstitutionally altered its administration of its MBE program to focus on race per se .” (Emphasis added.) We find that appellee’s arguments misconstrue the language, nature,
and character of Ohio’s MBE program. R.C. 122.71(E)(1) defines “minority business enterprise” as a business that is owned and controlled by persons “of the following economically disadvantaged groups: Blacks, American Indians, Hispanics, and Orientals.” (Emphasis added.) Apparently, appellee believes that a plain reading of the statute requires ODAS to consider whether an applicant for MBE certification is socially or economically disadvantaged and to certify businesses that demonstrate disadvantage regardless of the business owner’s race . That is, appellee reads R.C. 122.71(E)(1) as including in the definition of “minority business enterprise” businesses that are owned and controlled by members of the four groups specifically listed in the statute and any other businesses that can demonstrate economic disadvantage. However, R.C. 122.71(E)(1) clearly does not say that. Rather, under the plain terms of the statute, the four groups listed in R.C. 122.71(E)(1) are considered to be “economically disadvantaged groups,” and only businesses owned and controlled by members of the specified groups are capable of satisfying the statutory definition of “minority business enterprise.” Moreover, appellee’s position that R.C. 122.71(E)(1) plainly creates a disadvantaged-business-enterprise program— i.e ., one which benefits, inter alia , groups or individuals that fall outside the racial classification and that demonstrate economic disadvantage—is completely untenable in light of the legislative history of R.C. 122.71(E)(1). Specifically, that statute was originally enacted in 1980 as part of Am.Sub.H.B. No. 584, 138 Ohio Laws, Part II, 3062, 3065. As originally enacted, former R.C. 122.71(E)(1) provided: “ ‘Minority business enterprise’ means an individual, partnership, corporation, or joint venture of any kind that is owned and controlled by United States citizens, residents of Ohio, who are members of an economically disadvantaged group including, but not limited to, the following groups: Blacks, American Indians, Hispanics, and Orientals .” (Emphasis added.) . In 1981, the above-emphasized portion of the statute was altered by amendment, and the following language was inserted in its place: “one of the following economically disadvantaged groups: Blacks, American Indians, Hispanics, and Orientals.” 139 Ohio Laws, Part II, 3166 and 3506. Obviously, the 1981 amendment to R.C. 122.71(E)(1) evinces a clear legislative intention not to include in the definition of “minority business enterprise” any businesses owned and controlled by members of any group other than the four specific groups listed in the statute. Further, to accept appellee’s interpretation of the statute would
essentially require us to rewrite it and to enact a new MBE program that benefits
all disadvantaged businesses, thereby changing the MBE program into a
disadvantaged-business-enterprise program. However, Ohio’s MBE program was
clearly designed to serve a far different purpose from the one appellee suggests it
should now serve. Given the plain language of R.C. 122.71(E)(1) and its history,
we are in no position to modify the clear and unambiguous terms of the statute by
rewriting it, under the guise of judicial interpretation, to make it say something far
different from what the statute actually says and means. This court is not now, nor
has it ever been, a judicial legislature. When a statute is assailed as
unconstitutional, it is our duty to liberally construe it to save the statute from
constitutional infirmities. See,
e.g
.,
Wilson v. Kennedy
(1949),
former Equal Employment Opportunity Coordinator Booker T. Tall had granted MBE certification to appellee in 1991 based solely on a determination that appellee was a “disadvantaged business” enterprise. To support this argument, appellee relies on Tall’s 1992 deposition in an unrelated case. Armed with this deposition, appellee argues that “[w]hen Ritchey Produce first applied [for MBE certification], ODAS correctly certified any business demonstrating actual ‘social or economic disadvantage,’ thus certifying MBE’s on a case-by-case basis. According to the sworn deposition testimony of State EEOC Coordinator Booker T. Tall (the same coordinator who first certified Ritchey Produce as an MBE), determinations of whether a business qualified for MBE status rested upon whether the business qualified as a ‘disadvantaged business enterprise,’ not whether the business fit neatly into the listed racial categories of Black, Hispanic, American Indian or Oriental.” (Emphasis sic .) We have reviewed Tall’s deposition testimony in its entirety, and we
find that it does not fully support appellee’s contentions. Nor does the deposition
fully support the conclusions of the court of appeals on this issue. The testimony
indicates that, during Tall’s tenure as Equal Employment Opportunity Coordinator,
applications for MBE certification were reviewed to determine whether each
applicant was an “economically disadvantaged” enterprise. The testimony also
indicates, however, that MBE certifications were issued by Tall only upon a
determination that directly linked the ownership and control of the business to
members of one of the four specific racial or ethnic groups listed in R.C.
122.71(E)(1). Thus, it appears, when Tall originally granted MBE certification to
appellee, the certification was premised upon a determination that Ritchey, the
owner of the company, was Oriental. Precisely how Tall could have reached that
conclusion remains a mystery. Perhaps he construed the term “Oriental” to include
a person of Lebanese descent, or perhaps he never thoroughly reviewed appellee’s
original application for MBE certification, wherein Ritchey indicated, among other
things, that he was Lebanese. In any event, as the magistrate noted at the trial court
level, “under [
DLZ Corp. v. Ohio Dept. of Adm. Serv.
(1995), 102 Ohio App.3d
777,
affidavit) that when Ritchey first applied for MBE certification, an employee of the
state’s Equal Employment Opportunity Coordinator’s Office had interviewed
Ritchey and had instructed him to fill out the application form by “chеck[ing] the
box under ‘racial/ethnic group’ that most closely related to [Ritchey’s] nation of
origin.” Since there were only four racial groups from which Ritchey could chose,
i.e
., Black, Hispanic, American Indian, and Oriental, Ritchey chose “Oriental” and
marked the application accordingly. Appellee claims to have made that choice
because the term “Oriental” was consistent with his “traditional understanding” that
the term included people of Lebanese descent. Ritchey also asserts that he did not
arrive at that decision himself and implies that the interviewer, by directing him to
choose one of the four possible options on the application form, had participated in
that decision. However, to the extent that the interviewer did participate in the
conclusion that Ritchey was Oriental (and, incidentally, there is no proof that the
interviewer did so), that conclusion was clearly incorrect. See our discussion in
Part VII, below. Moreover, there is simply no proof that the actions of the employee
or employees who interviewed Ritchey represent a department-wide policy of
certifying MBEs regardless of the business owner’s race. The decision to approve
the original application for MBE certification was Tall’s decision to make, and we
have already stated our views concerning his deposition testimony. Although
Ritchey apparently never intended to deceive anyone with respect to his race or
ethnicity, the fact that Ritchey Produce was certified as an Oriental-owned MBE
appears to have resulted from a series of errors.
Appellee also relies heavily on
Adarand
,
2097,
Governor George V. Voinovich in 1996 and 1997, specifically, Executive Order 96-53V (entitled “Socially and Economically Disadvantaged Business Policy”), and Executive Order 97-14V (entitled “Historically Underutilized Business Policy”). [4] These executive orders indicate a policy of the state with respect to the 4. In March 1996, Governor George V. Voinovich issued Executive Order 96-53V, entitled “Socially and Economically Disadvantaged Business Policy.” The order directed ODAS’s Equal Opportunity Center to begin cross-certifying MBEs that had federal disadvantaged-business- enterprise (“DBE”) status as both MBEs and Ohio DBEs. The order also directed ODAS to begin establishing a system of certifying Ohio DBEs on the basis of economic and social disadvantage. The Governor’s order directed all cabinet-level state agencies, beginning in 1997, to establish a goal that five percent of their available contracting dollars in the area of construction, goods, and services be awarded through open and competitive bidding to Ohio DBEs. In June 1997, Governor Voinovich issued Executive Order 97-14V. The 1997 order changed the name of the “Socially and Economically Disadvantaged Business Policy” to the “Historically Underutilized Business Policy,” and required cross-certification of MBEs with federal DBE status as historically underutilized businesses, or “HUBs.” The 1997 order, which is substantially similar to the 1996 order, is set out below:
“WHEREAS, the Voinovich/Hollister Administration is committed to making all state services, benefits and opportunities available without discriminating on the basis of race, color, religion, sex, national origin, disability, age or ancestry; and
“WHEREAS, the State of Ohio recognizes that a significant number of struggling businesses are owned by Ohio citizens who are competitively underutilized because of their social and economic status; and
“WHEREAS, the State of Ohio has a duty to secure the best available product at the lowest possible price and can best [do] so by assuring that as many qualified businesses as possible compete for every available contract; and
“WHEREAS, the State of Ohio recognizes the need to encourage, nurture and support the growth of economically and socially underutilized businesses to foster their development and increase the number of qualified competitors in the marketplace;
“NOW THEREFORE, I, George V. Voinovich, Governor of the State of Ohio, by virtue of the power and authority vested in me by the constitution and the statutes of the State of Ohio, do hereby order the following:
“1. the Director of Minority Affairs for the Office of the Governor shall provide oversight and policy guidance to all state agencies in the implementation of this Executive Order.
“2. The Department of Administrative Services’ State Equal Opportunity Division shall immediately:
“a. begin cross-certifying and recognizing those minority business enterprises (MBEs) which also have federal disadvantaged business enterprise 8(a) status (DBEs) as historically underutilized businesses (HUBs);
“b. begin designating and maintaining a list of all federally registered DBEs which are not certified MBEs but which are interested in doing business with the State of Ohio as HUBs;
“c. begin establishing a system of certifying Ohio HUBs which is based on a requirement that the business owner show both social and economic underutilization in order to become certified. The Department of Administrative Services’ Equal Opportunity Division shall establish Ohio guidelines which mirror the federal law, where appropriate, for determining:
“1. economic disadvantage based on the relative wealth of the company seeking certification as well as the personal wealth of the owner(s) of the company;
“2. social disadvantage based on one of two ways: (1) a rebuttable presumption when the business owner shows membership in a traditionally recognized racial minority group; or (2) by showing personal disadvantage due to color, ethnic origin, gender, physical disability, long-term residence in an environment isolated from the mainstream of American society, location in an area of high unemployment, or other similar cause not common to most small business persons;
“d. establish standards to determine when a business should be graduated as a result of achieving success to such a degree that the benefits of a state sponsored program are no longer necessary and the business can no longer be fairly considered to be disadvantaged. Businesses should also be removed after a period of time whether or not they have graduated from the program subject to the following:
“1. those standards which determine success on an economic basis shall be adjusted to reflect inflation and market fluctuation;
“2. graduation or removal in cases of family owned businesses should be judged on their individual merits and not be based on a previous owner/family member’s business success;
“3. a program extension of two years shall be provided even though the business has graduated provided the owner participates in mentoring, partnering or joint venturing with a new HUB;
“4. a business removed for non disciplinary reasons or graduated from the program may re-enter the program after one year provided that it meets all eligibility requirements.
“e. implement an outreach and education program which includes an aggressive recruiting component to assure that all disadvantaged businesses which might be eligible to compete for Ohio’s contracting and procurement dollars become certified to do so;
“f. establish a system to assist all other cabinet-level state agencies in identifying and utilizing HUBs in their contracting processes; and
“g. implement a system of self reporting as well as periodic on site inspections which will ensure that businesses registered as HUBs are actually owned and operated by individuals who are economically and socially disadvantaged; and
“h. provide to me, by December 31, 1997, and by December 31 of each year thereafter, a detailed report outlining and evaluating progress made in implementing this executive order.
“3. The Department of Development shall assist in the outreach and recruitment of HUBs and shall provide assistance to The Department of Administrative Services’ Equal Opportunity Division as needed in certifying new HUBs. Provide business development services to HUBs in the developmental and transitional stages of the program. The Department of Development shall also provide a report to me, by December 31, 1997, and by December 31 each year thereafter on their progress of assisting in the implementation of this executive order.
“4. Every Cabinet-Level State Agency shall, within the constraints of statutory authority and as otherwise provided by law:
“a. take appropriate steps to foster, support and encourage the participation of historically underutilized businesses and encourage such businesses to compete for construction contracts and the procurement of goods and services;
certification of disadvantaged business enterprises (now called “historically
underutilized business enterprises”) on the basis of social and economic
disadvantage. Appellee claims that “[t]hese current policy changes in compliance
with
Adarand
are admissions by the State that it recognizes the United States
Supreme Court dictate that ‘disadvantaged business’ programs must be based on
social and economic disadvantage, and not on race
per se
.” However, these
executive orders deal with policies that differ from the nature and purpose of the
MBE program. ODAS contends, and we agree, that the former Governor’s
programs merely supplement, but do not supplant, the MBE program. Moreover,
we do not view these executive orders as supporting the conclusions that appellee
attempts to draw from them. As we indicated in our discussion immediately above,
Adarand
holds that all racial classifications, whether imposed by federal, state, or
local government, are subject to strict scrutiny. .,
“b. cooperate with The Department of Administrative Services’ Equal Opportunity Division and the Department of Development in identifying and developing HUBs; and
“c. beginning in 1997, set a goal that 5% of their available contracting dollars in the areas of construction, goods, and services, be awarded through an open and competitive process to HUBs; and
“d. provide The Department of Administrative Services’ Equal Opportunity Division with quarterly reports on HUB utilization. “Effective with this order, I revoke all Executive Orders issued which are inconsistent with
this Order.”
{¶ 33} As to ODAS’s second proposition of law, appellee contends that the question whether Ritchey is Oriental is irrelevant, since, according to appellee, Adarand requires that businesses must be admitted into the program on the basis of actual and social economic disadvantage. Appellee also claims that “Ritchey qualifies under the definition of ‘Oriental’ as originally reviewed and certified by the State, or as should be properly administered now.” Therefore, appellee maintains that Ritchey is Oriental, even though Ritchey admitted to the trial court’s magistrate that he is not Oriental. To complicate matters further, amici enter the fray by urging us to
consider ODAS’s propositions of law in reverse order, i.e ., to address the second proposition of law first, and the first proposition of law second. With respect to ODAS’s second proposition of law, amici claim that Ritchey is Oriental—although he clearly is not. Nevertheless, amici urge that construing the term “Orientals” in R.C. 122.71(E)(1) in accordance with rules of grammar and common usage, the term clearly includes within its meaning individuals of Lebanese descent. With respect to ODAS’s first proposition of law, amici urge us to uphold R.C. 122.71(E)(1) as a constitutional exercise of legislative authority. In reply to the arguments of appellee and of appellee’s supporting
amici , ODAS points out thаt appellee’s arguments in this case have been specifically calibrated “to save the program for [appellee’s] benefit, while disregarding the impact on all other MBEs—that is, if [appellee] cannot be certified under the existing program, then no company can.” ODAS notes that the controversy in this case arose simply because ODAS had adhered to the plain language of R.C. 122.71(E)(1) in denying appellee’s application for recertification. ODAS observes that, despite this fact, appellee now “argues that the facial validity of the MBE program is not at issue” and “that the only constitutional question before the Court is whether the statute is constitutional as applied only to it.” ODAS contends that appellee’s arguments indicate that appellee “does not seek to participate in the Ohio MBE program as that program is statutorily structured and as it is currently applied,” and that “[i]nstead, Ritchey asks the Court to grant him the benefit of a different program, one that would rely not on his race, but on his economic or social disadvantage, presumably arising in some way from his race.” (Emphasis sic .) We agree with ODAS’s summary:
“In the final analysis, the semantics of whether the Court of Appeals decision presents a ‘facial’ or ‘as applied’ constitutional challenge to the MBE program are not critical. Nor is it critical for the Court to consider the issues presented in a particular order. What is critical is for the Court to consider, in full view, the State’s compelling interest in redressing state-sponsored racial discrimination and its narrow tailoring of a program [the MBE program] to meet that interest.”
II Having set forth the arguments raised in this appeal, we now
consider the precedents governing the determination whether Ohio’s MBE
program, specifically, R.C. 122.71(E)(1), violates the Equal Protection Clause of
the Fourteenth Amendment. For the past twenty years, the United States Supreme
Court has struggled with the tension between the Fourteenth Amendment guarantee
of equal protection of citizens and the use of race-based measures imposed by
governmental actors to ameliorate the effects of past discrimination on minority
groups in society. Beginning with
Regents of the Univ. of California v. Bakke
(1978), 438 U.S. 265, 98 S.Ct. 2733, 57 L.Ed.2d 750, and continuing through
Adarand
, 515 U.S. 200, 115 S.Ct. 2097, 132 L.Ed.2d 158, the United States
Supreme Court has written volumes on the subject. Over the course of the years,
the court resolved the once-embattled question concerning the appropriate standard
of review for benign or remedial race-based governmental action, finding that the
standard for all governmental classifications based on race is the strict scrutiny
standard of review. See
Adarand
,
{¶ 37}
As we enter into our review of the opinions of the United States
Supreme Court on the subject of remedial race-based governmental action, we first
note that the cases are both difficult and complex. In conducting our analysis, we
set forth a summary of the high court’s pronouncements. While our discussion
tends to be lengthy, we find it necessary for our decisionmaking in this case.
The issue in
Bakke
,
held that the challenged admissions program was unconstitutional and that the
medical school could not consider race as part of its admissions decisions.
However, the trial court refused to order Bakke’s admission, finding that Bakke
had failed to prove that he would have been admitted but for the special program.
The state Supreme Court, applying the strict scrutiny standard of review, affirmed
the trial court’s finding that the special admissions program violated the Equal
Protection Clause but also directed the trial court to order Bakke’s admission to the
school. Thereafter, the United States Supreme Court granted certiorari to consider
the constitutional issue.
In
Bakke
,
States Supreme Court affirmed the judgment of the state Supreme Court that Bakke
was entitled to admission, but reversed insofar as the courts below had prohibited
the school from establishing a race-conscious program in the future.
Bakke
resulted
in many different opinions of the Justices, with no single opinion speaking for the
court. However, in Justice Powell’s opinion announcing the judgment in
Bakke
, in
a section joined by Justice White, he rejected an argument that strict scrutiny should
be reserved for classifications that disadvantage “discrete and insular minorities.”
Id
. at 287-291,
{¶ 41} Justice Powell’s opinion in Bakke is of great historic significance in that it built a foundation upon which the court’s future cases would be grounded. Therefore, a detailed discussion of that opinion is in order. Justice Powell’s opinion in Bakke considered four possible
objectives of the special admissions program, none of which was found to justify
the program under strict scrutiny.
Id
.,
admissions program (counteracting “societal discrimination”), Justice Powell
observed that a state clearly has an interest in ameliorating the effects of
identified
discrimination but that the goal of remedying the effects of historic societal
discrimination, “an amorphous concept of injury that may be ageless in its reach
into the past,” did not justify imposing a burden on Bakke.
Id
.,
to justify the special admissions program (to increase the number of doctors serving
disаdvantaged communities), Justice Powell concluded that the petitioner had made
no showing that the special admissions program was either needed or geared to
promote that goal. .,
but no single opinion on behalf of the court. Thus, Justice Powell’s opinion on the
constitutional question spoke only of Justice Powell’s own views of the case, except
in certain limited instances. In addition to Justice Powell’s opinion, four Justices
in
Bakke
found that a less stringent standard of review should be applied to racial
classifications that have been designed to further remedial purposes and, in
applying that standard, found that the special admissions program was
constitutional in all respects. .,
confronted a case involving a congressional spending program that established a remedial set-aside plan for the benefit of minority business enterprises. Specifically, in Fullilove v. Klutznick (1980), 448 U.S. 448, 100 S.Ct. 2758, 65 L.Ed.2d 902, the court considered a facial challenge to the constitutionality of the MBE provision of the Public Works Employment Act of 1977. The MBE provision required that absent an administrative waiver, at least ten percent of federal funds granted for local public works projects were to be used by the state or local grantee to procure services or supplies from business enterprises owned and controlled by minority group members. For purposes of the provision, minority group members were defined as citizens of the United States who were “Negroes, Spanish- speaking, Orientals, Indians, Eskimos, and Aleuts.” Section 6705(f)(2), Title 42, U.S.Code. The petitioners in Fullilove challenged the MBE provision in federal district court, claiming, among other things, that the MBE provision violated the Equal Protection Clause of the Fourteenth Amendment and the equal protection component of the Due Process Clause of the Fifth Amendment. The federal district court and the United States Second Circuit Court of Appeals upheld the MBE provision as constitutional in all respects. In Fullilove , the vote of the United States Supreme Court was once
again extremely fractured, and
Fullilove
, like
Bakke
, produced no majority opinion
for the court. The lead opinion in
Fullilove
was authored by Chief Justice Burger
and was joined by Justices White and Powell. That opinion explored, in detail, the
legislative history of the federal MBE provision. The opinion noted that Congress
had apparently believed that the provision requiring a ten-percent set-aside was
necessary to ensure minority business participation in projects funded through the
congressional spending program.
Id
., 448 U.S. at 462, 100 S.Ct. at 2766, 65
L.Ed.2d at 914. The opinion observed that absent such a requirement, “it was
thought that repetition of the prior experience [of an earlier congressional spending
package] could be expected, with participation by minority business accounting for
an inordinately small percentage of government contracting.” . at 462-463, 100
S.Ct. at 2766-2767,
policies that had been developed for administering the federal MBE program.
Administrative regulations specified that where contractors were to be selected by
state or local grantees through competitive bidding, bids for the prime contract were
to be considered responsive only if at least ten percent of the contract funds were
to be expended for MBEs. Administrative guidelines had also been developed to
ensure that waivers of the ten-percent set-aside requirement were to be granted on
a case-by-case basis and upon a determination that, despite affirmative efforts, the
required level of MBE participation could not be achieved.
Id
.,
participation by only bona fide MBEs by specifying, among other things, that
minority group ownership interests were to be “ ‘real and continuing and not created
solely to meet 10% MBE requirements.’ ” . at 492,
administration of the federal MBE program, the lead opinion in
Fullilove
found that
Congress had enacted the program as a “strictly remedial measure.”
Id
. at 481, 100
S.Ct. at 2776,
objectives of the federal MBE program were within the scope of the congressional
spending power and concluded that insofar as the MBE program pertained to the
actions of state and local grantees, Congress’s objectives could have been achieved
by use of its power under Section 5 of the Fourteenth Amendment “to enforce, by
appropriate legislation,” the equal protection guarantees of that Amendment. .,
“With respect to the MBE provision, Congress had abundant evidence from which it could conclude that minority businesses have been denied effective participation in public contracting opportunities by procurement practices that perpetuated the effects of prior discrimination. Congress, of course, may legislate without compiling the kind of ‘record’ appropriate with respect to judicial or administrative proceedings. Congress had before it, among other data, evidence of a long history of marked disparity in the percentage of public contracts awarded to minority business enterprises. This disparity was considered to result not from any lack of capable and qualified minority businesses, but from the existence and maintenance of barriers to competitive access which had their roots in racial and ethnic discrimination, and which continue today, even absent any intentional discrimination or other unlawful conduct. Although much of this history related to the experience of minority businesses in the area of federal procurement, there was direct evidence before the Congress that this pattern of disadvantage and discrimination existed with respect to state and local construction contracting as well. In relation to the MBE provision, Congress acted within its competence to determine that the problem was national in scope.
“Although the Act recites no preambulary ‘findings’ on the subject, we are
satisfied that Congress had abundant historical basis from which it could conclude
that traditional procurement practices, when applied to minority businesses, could
perpetuate the effects of prior discrimination. Accordingly, Congress reasonably
determined that the prospective elimination of these barriers to minority firm access
to public contracting opportunities generated by the 1977 Act was appropriate to
ensure that those businesses were not denied equal opportunity to participate in
federal grants to state and local governments, which is one aspect of the equal
protection of the laws. Insofar as the MBE program pertains to the actions of state
and local grantees, Congress could have achieved its objectives by use of its power
under §5 of the Fourteenth Amendment. We conclude that in this respect the
objectives of the MBE provision are within the scope of the Spending Power.” .,
means that had been chosen by Congress to accomplish its objectives were
constitutionally permissible. . at 480,
opinion in
Fullilove
addressed and rejected the concept that, in the remedial
context, Congress must act in a colorblind fashion.
Id
.,
deprive nonminority businesses of access to some percentage of the public
contracting opportunities, the lead opinion in
Fullilove
determined that it was “not
a constitutional defect in this program that it may disappoint the expectations of
nonminority firms,” since “[w]hen effectuating a limited and properly tailored
remedy to cure the effects of prior discrimination, such a ‘sharing of the burden’ by
innocent parties is not impermissible.” .,
underinclusive (
i.e
., that it benefited only specified minority groups and not other
businesses that may have suffered from disadvantage or discrimination), the lead
opinion in
Fullilove
concluded that any expansion of the program was “not a
function for the courts.” .,
“It is also contended that the MBE program is overinclusive—that it bestows a benefit on businesses identified by racial or ethnic criteria which cannot be justified on the basis of competitive criteria or as a remedy for the present effects of identified prior discrimination. It is conceivable that a particular application of the program may have this effect; however, the peculiarities of specific applications are not before us in this case. We are not presented here with a challenge involving a specific award of a construction contract or the denial of a waiver request; such questions of specific application must await future cases.
“This does not mean that the claim of overinclusiveness is entitled to no consideration in the present case. The history of governmental tolerance of practices using racial or ethnic criteria for the purpose or with the effect of imposing an invidious discrimination must alert us to the deleterious effects of even benign racial or ethnic classifications when they stray from narrow remedial justifications. Even in the context of a facial challenge such as is presented in this case, the MBE provision cannot pass muster unless, with due account for its administrative program, it provides a reasonable assurance that application of racial or ethnic criteria will be limited to accomplishing the remedial objectives of Congress and that misapplications of the program will be promptly and adequately remedied administratively.
“It is significant that the administrative scheme provides for waiver and exemption. Two fundamental congressional assumptions underlie the MBE program: (1) that the present effects of past discrimination have impaired the competitive position of businesses owned and controlled by members of minority groups; and (2) that affirmative efforts to eliminate barriers to minority-firm access, and to evaluate bids with adjustment for the present effects of past discrimination, would assure that at lеast 10% of the federal funds granted under the Public Works Employment Act of 1977 would be accounted for by contracts with available, qualified, bona fide minority business enterprises. Each of these assumptions may be rebutted in the administrative process.
“The administrative program contains measures to effectuate the congressional objective of assuring legitimate participation by disadvantaged MBE’s. Administrative definition has tightened some less definite aspects of the statutory identification of the minority groups encompassed by the program. There is administrative scrutiny to identify and eliminate from participation in the program MBE’s who are not ‘bona fide’ within the regulations and guidelines; for example, spurious minority-front entities can be exposed. A significant aspect of this surveillance is the complaint procedure available for reporting ‘unjust participation by an enterprise or individuals in the MBE program.’ * * * And even as to specific contract awards, waiver is available to avoid dealing with an MBE who is attempting to exploit the remedial aspects of the program by charging an unreasonable price, i.e ., a price not attributable to the present effects of past discrimination. * * * We must assume that Congress intended close scrutiny of false claims and prompt action on them.
“Grantees are given the opportunity to demonstrate that their best efforts will not succeed or have not succeeded in achieving the statutory 10% target for minority firm participation within the limitations of the program’s remedial objectives. In these circumstances a waiver or partial waiver is available once compliance has been demonstrated. A waiver may be sought and granted at any time during the contracting process, or even prior to letting contracts if the facts warrant.
“* * *
“That the use of racial and ethnic criteria is premised on assumptions
rebuttable in the administrative process gives reasonable assurance that application
of the MBE program will be limited to accomplishing the remedial objectives
contemplated by Congress and that misapplications of the racial and ethnic criteria
can be remedied. In dealing with this facial challenge to the statute, doubts must
be resolved in support of the congressional judgment that this limited program is a
necessary step to effectuate the constitutional mandate for equality of economic
opportunity. The MBE provision may be viewed as a pilot project, appropriately
limited in extent and duration, and subject to reassessment and reevaluation by the
Congress prior to any extension or reenactment. Miscarriages of administration
could have only a transitory economic impact on businesses not encompassed by
the program, and would not be irremediable.” (Footnotes omitted.)
Id
., 448 U.S.
at 486-489,
Congress must proceed only with programs narrowly tailored to achieve its
objectives, subject to continuing evaluation and reassessment; administration of the
programs must be vigilant and flexible; and, when such a program comes under
judicial review, courts must be satisfied that the legislative objectives and projected
administration give reasonable assurance that the program will function within
constitutional limitations.” . at 490, 100 S.Ct. at 2781, 65 L.Ed.2d at 932.
Additionally, the opinion notes, “Any preference based on racial or ethnic criteria
must necessarily receive a most searching examination to make sure that it does not
conflict with constitutional guarantees.” . at 491,
for the court. In addition to Chief Justice Burger’s lead opinion (joined by Justices
White and Powell), Justice Powell wrote a separate concurring opinion, in which
he expressed the view that the lead opinion
was substantially in accordance with
his own views that strict scrutiny applied to the racial classification of the federal
MBE provision
and that, for all practical purposes
, the lead opinion had applied
that standard correctly
.
Id
., 448 U.S. at 495-496, 100 S.Ct. at 2783-2784, 65
L.Ed.2d at 935. Justice Powell stated that the applicable standard is whether a racial
classification “is a necessary means of advancing a compelling governmental
interest.” . at 496,
{¶ 61}
Justice Stewart, joined by Justice Rehnquist, dissented.
Id
. at 522-
532, 100 S.Ct. at 2797-2803, 65 L.Ed.2d at 953-959. He argued that the equal
protection standard is the same for state and federal governments, that the single
standard prohibits invidious discrimination, that all discrimination is invidious by
definition, and that the federal MBE provision was unconstitutional because it
granted preferences to certain groups on the basis of race. .,
Jackson Bd. of Edn
. (1986),
{¶ 64} In Wygant , the displaced nonminority teachers sued in federal district court, alleging violations of, among other things, the Equal Protection Clause of the Fourteenth Amendment. The district court upheld the constitutionality of the school board’s race-based layoffs. The district court found that the racial preferences granted by the school board need not have been grounded on a finding of prior discrimination, and that the racial preferences were permissible under the Equal Protection Clause as an attempt to remedy societal discrimination by providing role models for minority schoolchildren. On appeal, the United States Sixth Circuit Court of Appeals affirmed the judgment of the district court. Thereafter, the United States Supreme Court granted certiorari to consider the constitutionality of race-based layoffs by public employers and reversed the judgment of the court of appeals. In Wygant , the United States Supreme Court was once again unable
to produce a majority opinion. Rather, Justice Powell wrote a plurality opinion, which was joined in full by Chief Justice Burger and by Justice Rehnquist, and in all but one part by Justice O’Connor. [5] The plurality phrased the issue in Wygant as “whether a school board, consistent with the Equal Protection Clause, may extend preferential protection against layoffs to some of its employees because of their race or national origin.” ., 476 U.S. at 269-270, 106 S.Ct. at 1844-1845, 90 L.Ed.2d at 266. In Wygant , Justice Powell’s plurality opinion observed that “the
level of scrutiny does not change merely because the challenged classification
operates against a group that historically has not been subject to governmental
discrimination.” . at 273, 106 S.Ct. at 1846, 90 L.Ed.2d at 268. Therefore,
recognizing that the layoff provision established a classification based on race and
5. All future references to the plurality in
Wygant v. Jackson Bd. of Edn
. (1986),
that it had operated against whites and in favor of certain minorities, the plurality
conducted a searching examination of the classification to determine whether it
conflicted with equal protection guarantees. The plurality noted that there are two
prongs to this examination: (1) whether the racial classification could be justified
by a compelling governmental interest and (2) whether the means chosen by the
state to effectuate its objective were narrowly tailored to the achievement of that
goal.
Id
. at 274,
conclusion of the Sixth Circuit (and that of the district court) that the respondent’s
“interest in providing minority role models for its minority students, as an attempt
to alleviate the effects of societal discrimination, was sufficiently important to
justify the racial classification embodied in the layoff provision.”
Id
., 476 U.S. at
274,
amorphous a basis for imposing a racially classified remedy,” and that the role-
model theory espoused by the district and appellate courts merely “typify this
indefiniteness,” the
Wygant
plurality determined that the role model justification
for the race-based layoff provision was not sufficiently compelling.
Id
. at 276, 106
S.Ct. at 1848,
the layoff provision was to remedy the board’s own prior discriminatory hiring
practices. The plurality in
Wygant
did not
specifically
determine whether that
asserted remedial objective constituted a compelling state interest.
Id
., 476 U.S. at
278,
“[A] public employer like the Board must ensure that, before it embarks on an affirmative-action program, it has convincing evidence that remedial action is warranted. That is, it must have sufficient evidence to justify the conclusion that there has been prior discrimination.
“Evidentiary support for the conclusion that remedial action is warrаnted becomes crucial when the remedial program is challenged in court by nonminority employees. In this case, for example, petitioners contended at trial that the remedial program—Article XII—had the purpose and effect of instituting a racial classification that was not justified by a remedial purpose. * * * In such a case, the trial court must make a factual determination that the employer had a strong basis in evidence for its conclusion that remedial action was necessary. The ultimate burden remains with the employees to demonstrate the unconstitutionality of an affirmative-action program. But unless such a determination is made, an appellate court reviewing a challenge by nonminority employees to remedial action cannot determine whether the race-based action is justified as a remedy for prior discrimination.” (Emphasis added.) Id . at 277-278, 106 S.Ct. at 1848-1849, 90 L.Ed.2d at 271. The plurality in Wygant also observed that no such factual
determination had ever been made in the case.
Id
.,
question whether the asserted objective of remedying the effects of the school
board’s own discriminatory hiring practices was sufficiently compelling, turned to
the issue whether the means chosen by the school board for the achievement of that
objective were narrowly tailored.
Id
. at 279-284, 106 S.Ct. at 1849-1852, 90
L.Ed.2d at 272-275. First, however, the plurality consisting of Burger, C.J., Powell
and Rehnquist, JJ., noted that the court of appeals had reviewed the “means chosen
to accomplish the Board’s race-conscious purposes under a test of ‘reasonableness.’
”
Id
. at 279,
“While hiring goals impose a diffuse burden, often foreclosing only one of
several opportunities, layoffs impose the entire burden of achieving racial equality
on particular individuals, often resulting in serious disruption of their lives. That
burden is too intrusive. We therefore hold that, as a means of accomplishing
purposes that otherwise may be legitimate, the Board’s layoff plan is not
sufficiently narrowly tailored. Other, less intrusive means of accomplishing similar
purposes—such as the adoption of hiring goals—are available. For these reasons,
the Board’s selection of layoffs as the means to accomplish even a valid purpose
cannot satisfy the demands of the Equal Protection Clause.” (Footnotes omitted.)
Id
. at 283-284,
concurring in judgment.
Id
., 476 U.S. at 284-294, 106 S.Ct. at 1852-1858, 90
L.Ed.2d at 275-282. Additionally, Justice White concurred in judgment only and
wrote separately to express his views that none of the interests asserted by the
school board, taken singly or together, justified the board’s layoff policy. . at
294-295,
Justices Brennan and Blackmun, argued for the application of a less exacting,
intermediate level of review for remedial race-based governmental classifications.
.,
respects. Justice O’Connor observed that the proper analysis for racial
classifications that work to the disadvantage of nonminorities had been articulated
in a number of different ways by the individual Justices, in
Wygant
and elsewhere,
with no particular test or formulation being adopted by a majority of the court.
Id
.,
“The Court is in agreement that, whatever the formulation employed,
remedying past or present racial discrimination by a state actor is a sufficiently
weighty state interest to warrant the remedial use of a carefully constructed
affirmative action program
. This remedial purpose
need not be accompanied by
contemporaneous findings of actual discrimination
to be accepted as legitimate as
long as the public actor has a
firm basis for believing
that remedial action is
required.” (Emphasis added.) . at 286,
“Respondent School Board argues that the governmental purpose or goal advanced here was the School Board’s desire to correct apparent prior employment discrimination against minorities while avoiding further litigation. * * * The Michigan Civil Rights Commission determined that the evidence before it supported the allegations of discrimination on the part of the Jackson School Board, though that determination was never reduced to formal findings because the School Board, with the agreement of the Jackson Education Association (Union), voluntarily chose to remedy the perceived violation. Among the measures the School Board and the Union eventually agreed were necessary to remedy the apparent prior discrimination was the layoff provision challenged here; they reasoned that without the layoff provision, the remedial gains made under the ongoing hiring goals contained in the collective bargaining agreement could be eviscerated by layoffs.
“The District Court and the Court of Appeals did not focus on the School Board’s unquestionably compelling interest in remedying its apparent prior discrimination when evaluating the constitutionality of the challenged layoff provision. Instead, both courts reasoned that the goals of remedying ‘societal discrimination’ and providing ‘role models’ were sufficiently important to withstand equal protection scrutiny. I agree with the plurality that a governmental agency’s interest in remedying ‘societal’ discrimination, that is, discrimination not traceable to its own actions, cannot be deemed sufficiently compelling to pass constitutional muster under strict scrutiny. * * * I also concur in the plurality’s assessment that use by the courts below of a ‘role model’ theory to justify the conclusion that this plan had a legitimate remedial purpose was in error. * * * Thus, in my view, the District Court and the Court of Appeals clearly erred in relying on these purposes and in failing to give greater attention to the School Board’s asserted purpose of rectifying its own apparent discrimination.
“The error of the District Court and the Court of Appeals can be explained by reference to the fact that the primary issue argued by the parties on the cross motions for summary judgment was whether the School Board, a court, or another competent body had to have made a finding of past discrimination before or at the time of the institution of the plan in order for the plan to be upheld as remedial in purpose. * * * The courts below ruled that a particularized, contemporaneous finding of discrimination was not necessary and upheld the plan as a remedy for ‘societal’ discrimination, apparently on the assumption that in the absence of a specific, contemporaneous finding, any discrimination addressed by an affirmative action plan could only be termed ‘societal.’ * * * I believe that this assumption is false and therefore agree with the plurality that a contemporaneous or antecedent finding of past discrimination by a court or other competent body is not a constitutional prerequisite to a public employer’s voluntary agreement to an affirmative action plan . * * *
“A violation of federal statutory or constitutional requirements does not arise with the making of a finding; it arises when the wrong is committed. * * *
“The imposition of a requirement that public employers make findings that they have engaged in illegal discrimination before they engage in affirmative action programs would severely undermine public employers’ incentive to meet voluntarily their civil rights obligations. * * *
“Such results cannot, in my view, be justified by reference to the incremental value a contemporaneous findings requirement would have as an evidentiary safeguard. As is illustrated by this case, public employers are trapped between the competing hazards of liability to minorities if affirmative action is not taken to remedy apparent employment discrimination and liability to nonminorities if affirmative action is taken. Where these employers, who are presumably fully aware both of their duty under federal law to respect the rights of all their employees and of their potential liability for failing to do so, act on the basis of information which gives them a sufficient basis for concluding that remedial action is necessary, a contemporaneous findings requirement should not be necessary.
“This conclusion is consistent with our previous decisions recognizing the States’ ability to take voluntary race-conscious action to achieve compliance with the law even in the absence of a specific finding of past discrimination. * * * Indeed, our recognition of the responsible state actor’s competency to take these steps is assumed in our recognition of the States’ constitutional duty to take affirmative steps to eliminate the continuing effects of past unconstitutional discrimination. * * *
“Of course, as Justice Powell notes, the public employer must discharge this sensitive duty with great care; in order to provide some measure of protection to the interests of its nonminority employees and the employer itself in the event that its affirmative action plan is challenged, the public employer must have a firm basis for determining that affirmative action is warranted. Public employers are not without reliable benchmarks in making this determination. For example, demonstrable evidence of a disparity between the percentage of qualified blacks on a school’s teaching staff and the percentage of qualified minorities in the relevant labor pool sufficient to support a prima facie Title VII pattern or practice claim by minority teachers would lend a compelling basis for a competent authority such as the School Board to conclude that implementation of a voluntary affirmative action plan is appropriate to remedy apparent prior employment discrimination.
“* * * If a voluntary affirmative action plan is subsequently challenged in court by nonminority employees, those employees must be given the opportunity to prove that the plan does not meet the constitutional standard this Court has articulated. However, as the plurality suggests, the institution of such a challenge does not automatically impose upon the public employer the burden of convincing the court of its liability for prior unlawful discrimination; nor does it mean that the court must make an actual finding of prior discrimination based on the employer’s proof before the employer’s affirmative action plan will be upheld. * * * In ‘reverse discrimination’ suits, as in any other suit, it is the plaintiffs who must bear the burden of demonstrating that their rights have been violated. The findings a court must make before upholding an affirmative action plan reflect this allocation of proof and the nature of the challenge asserted. For instance, in the example posed above, the nonminority teachers could easily demonstrate that the purpose and effect of the plan is to impose a race-based classification. But when the Board introduces its statistical proof as evidence of its remedial purpose, thereby supplying the court with the means for determining that the Board had a firm basis for concluding that remedial action was appropriate, it is incumbent upon the nonminority teachers to prove their case; they continue to bear the ultimate burden of persuading the court that the Board’s evidence did not support an inference of prior discrimination and thus a remedial purpose, or that the plan instituted on the basis of this evidence was not sufficiently ‘narrowly tailored.’ Only by meeting this burden could the plaintiffs establish a violation of their constitutional rights, and thereby defeat the presumption that the Board’s assertedly remedial action based on the statistical evidence was justified .
“* * *
“There is, however, no need to inquire whether the provision actually had a legitimate remedial purpose based on the record, such as it is, because the judgment is vulnerable on yet another ground: the courts below applied a ‘reasonableness’ test in evaluating the relationship between the ends pursued and the means employed to achieve them that is plainly incorrect under any of the standards articulated by this Court. Nor is it necessary, in my view, to resolve the troubling questions whether any layoff provision could survive strict scrutiny or whether this particular layoff provision could, when considered without reference to the hiring goal it was intended to further, pass the onerous ‘narrowly tailored’ requirement. Petitioners have met their burden of establishing that this layoff provision is not ‘narrowly tailored’ to achieve its asserted remedial purpose by demonstrating that the provision is keyed to a hiring goal that itself has no relation to the remedying of employment discrimination.
“* * * The disparity between the percentage of minorities on the teaching
staff and the percentage of minorities in the student body is not probative of
employment discrimination;
it is only when it is established that the availability of
minorities in the relevant labor pool substantially exceeded those hired that one
may draw an inference of deliberate discrimination in employment
. * * * Because
the layoff provision here acts to maintain levels of minority hiring that have no
relation to remedying employment discrimination, it cannot be adjudged ‘narrowly
tailored’ to effectuate its asserted remedial purpose.” (Emphasis added in part and
deleted in part; footnote omitted.)
Wygant
,
Wygant
left unresolved the question as to the appropriate standard of review in
cases involving remedial race-based governmental action. However, the court’s
1989 decision in
Croson
,
Minority Business Utilization Plan in 1983. The plan required prime contractors
who had been awarded city construction contracts to subcontract at least thirty
percent of the dollar amount of the contract to MBEs. The plan defined an MBE
as any business owned and controlled by minority group members. Minority group
members were defined by the plan as citizens of the United States who are “Blacks,
Spanish-speaking, Orientals, Indians, Eskimos, or Aleuts.” . at 478, 109 S.Ct. at
713,
meant to promote wider participation by MBEs in the construction of public
projects. The plan was adopted by city council following a public hearing. At the
hearing, no direct evidence was presented that the city had ever engaged in racial
discrimination in its construction contracting or that the city’s prime contractors
had ever discriminated against minority subcontractors. The evidence at the
hearing included a study indicating that, although the population of Richmond was
fifty-percent black, a mere .67 percent of the city’s prime construction contracts
had been awarded to MBEs between 1978 and 1983. It was also established that a
variety of contractors’ associations had virtually no MBE members. Additionally,
legal counsel for the city had indicated that the plan was constitutional under
Fullilove
,
city solicited bids on a construction project for the installation of plumbing fixtures
at the city jail. J.A. Croson Company (“Croson”) was the sole bidder. Croson
applied for and was denied a waiver of the set-aside requirement, and,
consequently, Croson eventually lost its contract with the city. Thereafter, Croson
sued in federal district court, alleging that the city ordinance was unconstitutional,
on its face and as applied, under the Equal Protection Clause of the Fourteenth
Amendment. The district court upheld Richmond’s set-aside plan in all respects.
On appeal, the United States Fourth Circuit Court of Appeals,
applying a test derived from
Fullilove
, affirmed the judgment of the district court.
The court of appeals found that the great deference the
Fullilove
court had accorded
to Congress’s findings of past national discrimination in the construction industry
also applied to the determination whether the Richmond City Council had acted
reasonably in adopting the Richmond set-aside plan. Specifically, the appellate
court found that the national findings of discrimination, coupled with the statistical
study showing the lack of significant minority participation in public contracting in
Richmond, provided a reasonable basis for the city’s conclusion that the low
minority participation in city contracts was due to past discrimination. The court
of appeals also determined that the plan was narrowly tailored. However, on
petition for certiorari, the United States Supreme Court vacated the judgment of the
court of appeals and remanded the cause for further consideration in light of its
intervening decision in
Wygant
,
a plurality of the court on some issues and for a majority on others. The majority
in
Croson
held that “the standard of review under the Equal Protection Clause is
not dependent on the race of those burdened or benefited by a particular
classification,”
id.
,
difficult to discuss and even more difficult to understand. The lead opinion in Croson is actually a mixture of plurality and majority views. Thus, in order to derive full meaning from the Croson decision, a section-by-section analysis of the case becomes necessary. A plurality in Croson (Part II of opinion of O’Connor, J., joined by
Rehnquist, C.J., and White, J.) began the discussion by addressing an “initial battle”
of the parties “over the scope of the city’s power to adopt legislation designed to
address the effects of past discrimination.” .,
“Appellant [the city] and its supporting amici rely heavily on Fullilove for the proposition that a city council, like Congress, need not make specific findings of discrimination to engage in race-conscious relief. * * *
“What appellant ignores is that Congress, unlike any State or political subdivision, has a specific constitutional mandate [in Section 5 of the Fourteenth Amendment] to enforce the dictates of the Fourteenth Amendment. * * *
“That Congress may identify and redress the effects of society-wide discrimination does not mean that, a fortiori , the States and their political subdivisions are free to decide that such remedies are appropriate. Section 1 of the Fourteenth Amendment [containing the Equal Protection Clause] is an explicit constraint on state power, and the States must undertake any remedial efforts in accordance with that provision. To hold otherwise would be to cede control over the content of the Equal Protection Clause to the 50 state legislatures and their myriad political subdivisions. The mere recitation of a benign or compensatory purpose for the use of a racial classification would essentially entitle the States to exercise the full power of Congress under §5 of the Fourteenth Amendment and insulate any racial classification from judicial scrutiny under §1. We believe that such a result would be contrary to the intentions of the Framers of the Fourteenth Amendment, who desired to place clear limits on the States’ use of race as a criterion for legislative action, and to have the federal courts enforce those limitations. * * *
“* * * Thus, our treatment of an exercise of congressional power in Fullilove cannot be dispositive here. * * *
“It would seem equally clear, however, that a state or local subdivision (if
delegated the authority from the State) has the authority to eradicate the effects of
private discrimination within its own legislative jurisdiction. This authority must,
of course, be exercised within the constraints of §1 of the Fourteenth Amendment.
Our decision in
Wygant
is not to the contrary.
Wygant
addressed the
constitutionality of the use of racial quotas by local school authorities pursuant to
an agreement reached with the local teachers’ union. It was in the context of
addressing the school board’s power to adopt a race-based layoff program affecting
its own work force that the
Wygant
plurality indicated that the Equal Protection
Clause required ‘some showing of prior discrimination by the governmental unit
involved.’
Wygant
,
“Thus, if the city could show that it had essentially become a ‘passive
participant’ in a system of racial exclusion practiced by elements of the local
construction industry, we think it clear that the city could take affirmative steps to
dismantle such a system. It is beyond dispute that any public entity, state or federal,
has a compelling interest in assuring that public dollars, drawn from the tax
contributions of all citizens, do not serve to finance the evil of private prejudice.”
(Emphasis
sic
and footnote omitted.)
Croson
,
joined by Rehnquist, C.J., White and Kennedy, JJ.) stated that the rights secured by
the Equal Protection Clause are
personal
rights, and that the Richmond program
“denies certain citizens the opportunity to compete for a fixed percentage of public
contracts based solely upon their race.”
Id
.,
by Rehnquist, C.J., White and Kennedy, JJ.) also went on to discuss the rationale
of the plurality opinion in
Wygant
. Specifically, the plurality in
Croson
,
“In
Wygant
[
“The role model theory employed by the lower courts [in
Wygant
] failed for
two reasons. First, the statistical disparity between students and teachers had no
probative value in demonstrating the kind of prior discrimination in hiring or
promotion that would justify race-based relief.
“We think it clear that the factual predicate offered in support of the
Richmond Plan suffers from the same two defects identified as fatal in
Wygant
.
The District Court found the city council’s ‘findings sufficient to ensure that, in
adopting the Plan, it was remedying the present effects of past discrimination in the
construction industry
. * * * Like the ‘role model’ theory employed in
Wygant
, a
generalized assertion that there has been past discrimination in an entire industry
provides no guidance for a legislative body to determine the precise scope of the
injury it seeks to remedy. It ‘has no logical stopping point.’
Wygant
,
supra
, at 275
[
“Appellant argues that it is attempting to remedy various forms of past discrimination that are alleged to be responsible for the small number of minority businesses in the local contracting industry. Among these the city cites [the historic exclusion of blacks from skilled construction trade unions and training programs and a host of nonracial factors that would seemingly affect a member of any racial group seeking to establish a new business enterprise].
“While there is no doubt that the sorry history of both private and public
discrimination in this country has contributed to a lack of opportunities for black
entrepreneurs, this observation, standing alone, cannot justify a rigid racial quota
in the awarding of public contracts in Richmond, Virginia. Like the claim [in
Bakke
,
“It is sheer speculation how many minority firms there would be in Richmond absent past societal discrimination, just as it was sheer speculation how many minority medical students would have been admitted to the medical school at Davis [in Bakke ] absent past discrimination in educational opportunities. Defining these sorts of injuries as ‘identified discrimination’ would give local governments license to create a patchwork of racial preferences based on statistical generalizations about any particular field of endeavor.
“These defects are readily apparent in this case. The 30% quota cannot in any realistic sense be tied to any injury suffered by anyone. The District Court relied upon five predicate ‘facts’ in reaching its conclusion that there was an adequate basis for the 30% quota: (1) the ordinance declares itself to be remedial; (2) several proponents of the measure stated their views that there had been past discrimination in the construction industry; (3) minority businesses received 0.67% of prime contracts from the city while minorities constituted 50% of the city’s population; (4) there were very few minority contractors in local and state contractors’ associations; and (5) in 1977, Congress made a determination that the effects of past discrimination had stifled minority participation in the construction industry nationally. * * *
“None of these ‘findings,’ singly or together, provide the city of Richmond
with a ‘strong basis in evidence for its conclusion that remedial action was
necessary.’
Wygant
, 476 U.S., at 277 [106 S.Ct. at 1849, 90 L.Ed.2d at 271]
(plurality opinion). There is nothing approaching a prima facie case of a
constitutional or statutory violation by
anyone
in the Richmond construction
industry. ., at 274-275 [
O’Connor, speaking for the majority of the court, addressed and rejected each of
the five separate predicate facts the district court had relied upon in upholding the
city of Richmond’s set-aside program. . at 499-504,
in according great weight to the fact that city council had declared the Richmond
set-aside program to be remedial in nature.
Id
.,
on a “highly conclusionary” statement by a member of the Richmond City Council
that there was discrimination in the construction industry in Richmond, in Virginia,
and in the nation.
Id
.,
“In this case, the city does not even know how many MBE’s in the relevant market are qualified to undertake prime or subcontracting work in public construction projects. Cf. Ohio Contractors Assn. v. Keip [C.A.6, 1983], 713 F.2d [167], at 171 (relying on percentage of minority businesses in the State compared to percentage of state purchasing contracts awarded to minority firms in upholding set-aside). Nor does the city know what percentage of total city construction dollars minority firms now receive as subcontractors on prime contracts let by the city.
“To a large extent, the set-aside of subcontracting dollars seems to rest on
the unsupported assumption that white prime contractors simply will not hire
minority firms. * * * Indeed, there is evidence in this record that overall minority
participation in city contracts in Richmond is 7 to 8%, and that minority contractor
participation in the Community Block Development Grant
construction
projects is
17 to 22%. * * * Without any information on minority participation in
subcontracting, it is quite simply impossible to evaluate overall minority
representation in the city’s construction expenditures.” (Emphasis
sic
and footnote
omitted.)
Croson
,
“For low minority membership in these associations to be relevant, the city would have to link it to the number of local MBE’s eligible for membership. If the statistical disparity between eligible MBE’s and MBE membership were great enough, an inference of discriminatory exclusion could arise. In such a case, the city would have a compelling interest in preventing its tax dollars from assisting these organizations in maintaining a racially segregated construction market. See * * * [ Keip ], supra , [713 F.2d] at 171 (upholding minority set-aside based in part on earlier District Court finding that ‘the state [of Ohio] had become “a joint participant” with private industry and certain craft unions in a pattern of racially discriminatory conduct which excluded black laborers from work on public construction contracts’).” Croson , 488 U.S. at 503-504, 109 S.Ct. at 727, 102 L.Ed.2d at 888. Fifth, the court in Croson found that the city’s and the district court’s
reliance on Congress’s findings that there had been nationwide discrimination in
the construction industry in the context of the set-aside program approved in
Fullilove
was of extremely limited value in demonstrating the existence of
discrimination in Richmond.
Croson
at 504,
simply failed to make a showing of any
identified
discrimination in the Richmond
construction industry and, thus, had failed to demonstrate any compelling interest
for the race-based set-aside program.
Id
.,
“Since the city must already consider bids and waivers on a case-by-case basis, it is difficult to see the need for a rigid numerical quota. As noted above, the congressional scheme upheld in Fullilove allowed for a waiver of the set-aside provision where an MBE’s higher price was not attributable to the effects of past discrimination. Based upon proper findings, such programs are less problematic from an equal protection standpoint because they treat all candidates individually, rather than making the color of an applicant’s skin the sole relevant consideration. Unlike the program upheld in Fullilove , the Richmond Plan’s waiver system focuses solely on the availability of MBE’s; there is no inquiry into whether or not the particular MBE seeking a racial preference has suffered from the effects of past discrimination by the city or prime contractors.
“Given the existence of an individualized procedure, the city’s only interest
in maintaining a quota system rather than investigating the need for remedial action
in particular cases would seem to be simple administrative convenience. But the
interest in avoiding the bureaucratic effort necessary to tailor remedial relief to
those who truly have suffered the effects of prior discrimination cannot justify a
rigid line drawn on the basis of a suspect classification. * * * Under Richmond’s
scheme, a successful black, Hispanic, or Oriental entrepreneur from anywhere in
the country enjoys an absolute preference over other citizens based solely on their
race. We think it obvious that such a program is not narrowly tailored to remedy
the effects of prior discrimination.”
Croson
,
opinion. Therein, the plurality (O’Connor, J., joined by Rehnquist, C.J., White and Kennedy, JJ.) specifically stated, in no uncertain terms:
“Nothing we say today precludes a state or local entity from taking action
to rectify the effects of identified discrimination within its jurisdiction. If the city
of Richmond had evidence before it that nonminority contractors were
systematically excluding minority businesses from subcontracting opportunities, it
could take action to end the discriminatory exclusion. Where there is a significant
statistical disparity between the number of qualified minority contractors willing
and able to perform a particular service and the number of such contractors actually
engaged by the locality or the locality’s prime contractors, an inference of
discriminatory exclusion could arise. * * * Under such circumstаnces, the city could
act to dismantle the closed business system by taking appropriate measures against
those who discriminate on the basis of race or other illegitimate criteria.
* * * In the extreme case, some form of narrowly tailored racial preference might
be necessary to break down patterns of deliberate exclusion.” . at 509, 109 S.Ct.
at 730,
{¶ 96}
The plurality in
Croson
noted, however, that Richmond had
ascertained neither “how many minority enterprises are present in the local
construction market nor the level of their participation in city construction
projects,” and that “[t]he city points to no evidence that qualified minority
contractors have been passed over for city contracts or subcontracts, either as a
group or in any individual case.”
Id
.,
what he saw as the underlying premise of both
Wygant
and
Croson
— that
governmental decisions based on racial classifications are never permissible except
to remedy past wrongs.
Croson
,
520, 109 S.Ct. at 734-735, 102 L.Ed.2d at 897-899, concurring in part and
concurring in judgment. He joined all but Part II of the
Croson
opinion and stated
his general agreement with the strict scrutiny standard adopted by the court.
Id
. at
518-519,
528,
Equal Protection Clause of the
Fourteenth Amendment
for race-conscious set-aside
programs by
state and local governments
. However,
Croson
did not directly decide
the question as to the appropriate test under the
Fifth Amendment
for benign or
remedial race-based classifications imposed by the
federal government
. This latter
issue was addressed by the court in 1990, but was not
finally
resolved until the
court’s 1995 decision in
Adarand
,
“A majority of the Court in
Fullilove
[448 U.S. 448, 100 S.Ct. 2758, 65
L.Ed.2d 902] did not apply strict scrutiny to the race-based classification at issue.
Three Members inquired ‘whether the
objectives
of th[e] legislation are within the
power of Congress’ and ‘whether the limited use of racial and ethnic criteria * * *
is a constitutionally permissible
means
for achieving the congressional objectives.’
., at 473 [100 S.Ct. at 2772, 65 L.Ed.2d at 921] (opinion of Burger, C.J.)
(emphasis in original). Three other Members would have upheld benign racial
classifications that ‘serve important governmental objectives and are substantially
related to achievement of those objectives.’ ., at 519 [100 S.Ct. at 2796, 65
L.Ed.2d at 951] (Marshall, J., concurring in judgment). We apply
that standard
today. We hold that benign race-conscious measures mandated by Congress—even
if those measures are not ‘remedial’ in the sense of being designed to compensate
victims of past governmental or societal discrimination—are constitutionally
permissible to the extent that they serve important governmental objectives within
the power of Congress and are substantially related to achievement of those
objectives.” (Emphasis added and footnote omitted.)
Metro Broadcasting
, 497
U.S. at 564-565,
congressionally mandated benign racial classifications. The court distinguished its
holding from the decision in
Croson
(which had imposed the strict scrutiny standard
for all racial classifications prescribed by state and local governments) by noting
Congress’s unique powers in the area of equal protection and its institutional
competence to deal with societywide problems.
Metro Broadcasting
at 565-566,
Adarand
,
lost the guardrail subcontract to Gonzales, claiming that the race-based
presumptions involved in the government’s use of subcontracting compensation
clauses denied Adarand the right to equal protection of the laws. The district court
granted summary judgment in favor of the government. The United States Tenth
Circuit Court of Appeals affirmed the judgment of the district court. The court of
appeals read
Fullilove
,
of the Tenth Circuit Court of Appeals and remanded the cause to the lower federal
courts for review under strict scrutiny. . at 237-239, 115 S.Ct. at 2118, 132
L.Ed.2d at 189 (opinion of O’Connor, J., joined by Rehnquist, C.J., Scalia,
Kennedy and Thomas, JJ.). Justice O’Connor’s opinion in
Adarand
spoke for a
majority of the court, except in one particular section, and except to the extent that
the opinion “might be inconsistent” with the views expressed by Justice Scalia in
his concurrence. . at 204,
the relevant equal protection decisions predating
Metro Broadcasting
, 497 U.S.
547,
“First, skepticism: ‘ “Any preference based on racial or ethnic criteria must
necessarily receive a most searching examination,” ‘
Wygant
,
that the adoption of intermediate scrutiny in
Metro Broadcasting
had departed from
precedent in two important respects. First,
Metro Broadcasting
had turned its back
on the explanation in
Croson
as to why strict scrutiny of all governmental racial
classifications is essential, to wit, to determine what classifications are truly benign
or remedial as opposed to those that are motivated by illegitimate notions of racial
inferiority or racial politics, to smoke out illegitimate uses of race, and to ensure
that the means chosen by the governmental actor fit a compelling goal so tightly
that there is little or no chance that the motive for the classification was illegitimate
racial prejudice or stereotype.
Adarand
at 226,
skepticism, consistency, and congruence “all derive from the basic principle that
the Fifth and Fourteenth Amendments to the Constitution protect
persons
, not
groups
.” (Emphasis
sic
.) .,
subject to strict scrutiny, the court in
Adarand
observed, “Our action today makes
explicit what Justice Powell thought implicit in the
Fullilove
lead opinion: Federal
racial classifications, like those of a State, must serve a compelling governmental
interest, and must be narrowly tailored to further that interest. See
Fullilove
, 448
U.S., at 496 [
held notion concerning strict scrutiny, stating, “[W]e wish to dispel the notion that
strict scrutiny is ‘strict in theory, but fatal in fact.’ * * * The unhappy persistence
of both the practice and the lingering effects of racial discrimination against
minority groups in this country is an unfortunate reality, and government is not
disqualified from acting in response to it. * * * When race-based action is necessary
to further a compelling interest, such action is within constitutional constraints if it
satisfies the ‘narrow tailoring’ test this Court has set out in previous cases.”
Id
. at
237,
today alters the playing field in some important respects, we think it best to remand
the case to the lower courts for further consideration in light of the principles we
have announced.”
Id
. at 237,
Adarand
,
in
Adarand
. He agreed with the adoption of strict scrutiny for all racial
classifications, but wrote separately to address what he perceived to be an
underlying premise of the dissenting opinions of Justices Stevens and Ginsburg—
“that there is a racial paternalism exception to the principle of equal protection.”
Id
.,
joined by Justice Ginsburg.
Id
.,
{¶ 116}
In his dissent in
Adarand
, Justice Stevens also found the court’s
concept of congruence to be seriously misguided, stating that, in his judgment,
“Congressional deliberations about a matter as important as affirmative action
should be accorded far greater deference than those of a State or municipality.”
Id
.,
515 U.S. at 255, 115 S.Ct. at 2126,
One was authored by Justice Souter and was joined by Justices Ginsburg and
Breyer. . at 264-271,
III In light of the foregoing authorities, the strict scrutiny standard
clearly applies to our review of Ohio’s MBE set-aside program, and, specifically, R.C. 122.71(E), which defines “minority business enterprise” with explicit reference to race, and the relevant provisions of R.C. 125.081 and 123.151, requiring that approximate percentages of the state’s contracts must be set aside for competitive bidding by MBEs only. To survive strict scrutiny, the state’s race- based program must be justified by a compelling governmental interest, and the means chosen by the state to effectuate its purposes must be sufficiently narrowly tailored. With the foregoing cases to guide us, however, the question we must decide, i.e ., whether the program at issue meets strict scrutiny, is far easier asked than answered. There is no question that a state has a compelling interest in
remedying the past and present effects of identified racial discrimination within its
jurisdiction where the state itself was involved in the discriminatory practices. See,
generally,
Wygant
,
set-aside programs like the one at issue here, it is necessary to consider the factual
predicate offered in support of the program. See
id.
,
establish its compelling interest in the MBE program. ODAS contends that the state of Ohio enacted the MBE program for the purpose of redressing the past and lingering effects of identified racial discrimination in the area of state construction and procurement contracting. ODAS asserts that the state’s interest was compelling in that the state was a participant in the discrimination and the General Assembly had a “ ‘strong basis in evidence’ to support its conclusion that remedial action was necessary.” The trial court and the court of appeals did not consider this issue in any detail but, rather, concluded that although the state’s interest in adopting the MBE program may have been compelling, the MBE program was not narrowly tailored. However, we believe that it is simply impossible to reach such a conclusion without a detailed consideration of the nature and extent of the state’s interest in having adopted the MBE set-aside program. Indeed, upon a careful review of the state’s arguments in this case, it clear to us that the General Assembly had a “strong basis” in evidence to support its conclusion that Ohio’s program was necessary to redress a pattern of discriminatory exclusion of minorities from state contracting opportunities and, thus, had a compelling governmental interest for adopting the MBE program.
IV R.C. 122.71(E)(1), 123.151, and 125.081 were originally enacted
in 1980 as part of Am.Sub.H.B. No. 584, 138 Ohio Laws, Part II, 3062, 3065, 3081- 3085, 3088-3090 (the “1980 MBE Act”), a comprehensive legislative scheme that established, among other things, minority business loan and bonding programs and requirements for the setting aside of approximate percentages of the state’s construction and procurement contracts for MBEs. The 1980 MBE Act was passed by the General Assembly several months after the United States Supreme Court’s decision in Fullilove , 448 U.S. 448, 100 S.Ct. 2758, 65 L.Ed.2d 902, and, in a number of respects, Ohio’s program was substantially similar to the type of program upheld in Fullilove . In the early 1980s, the constitutionality of certain portions of the
1980 MBE Act, as amended, and, specifically, the provisions requiring set-asides
for minority businesses enterprises (
i.e
., R.C. 122.71, 123.151, and 125.081), were
challenged in federal district court in
Ohio Contractors Assn. v. Keip
(Dec. 15,
1982), S.D.Ohio No. C-2-82-446, unreported, reversed (C.A.6, 1983), 713 F.2d
167. The district court struck down the challenged statutes under the Equal
Protection Clause of the Fourteenth Amendment. However, on appeal, the United
States Sixth Circuit Court of Appeals reversed the judgment of the district court
and upheld the challenged provisions. The Sixth Circuit’s decision in
Keip
was
based on the available precedents at that time, namely, the several opinions in
Bakke,
minorities in the area of state contracting was documented and established by
judicial decision as early as 1967. In
Ethridge v. Rhodes
(S.D.Ohio 1967), 268
F.Supp. 83,
Ethridge
in an executive order. Specifically, the Governor issued an order dated
January 27, 1972, directing all state agencies to eliminate discriminatory barriers to
employment, including “efforts required to remedy all effects of
present and past
discriminatory patterns and practices
and those actions necessary to guarantee
equal employment opportunity for all people.” (Emphasis added.) The purpose of
this order was, among other things, to increase minority participation in state
contracting opportunities. The Governor’s 1972 order was part of the evidentiary
mosaic considered by members of the Ohio General Assembly at the time the 1980
MBE Act was under consideration.
Keip
,
for minority contractors as part of Am.Sub.H.B. No. 618, 137 Ohio Laws, Part II, 3100, a biennial capital-improvement appropriations Act. Am.Sub.H.B. No. 618 approved funding for, among other things, capital-improvement projects throughout the state. Section 13 of the bill provided: “No funds shall be appropriated as utilized for any purpose pursuant to this Act unless the project for which such funds are appropriated or utilized provides for an affirmative action program for the employment and effective utilization of disadvantaged persons whose disadvantage may arise from cultural, racial or ethnic background, or other similar cause including, without limitation, race, religion, sex, national origin, or ancestry.” 137 Ohio Laws, Part II, 3129. Additionally, Section 13 provided, “The Ohio Board of Regents for all higher education projects, and the Department of Administrative Services for all other capital projects, shall identify and designate specific capital improvements projects, or specific contracts or sub-contracts to be awarded as part of such projects, for which minority business enterprises or small businesses, after certification of eligibility [by the Regents or by ODAS], shall be invited to participate in the competitive bidding procedures for such projects, contracts, or sub-contracts as set forth in Chapters 127. and 153. of the Revised Code.” 137 Ohio Laws, Part II, 3130-3131. Section 13 defined “minority business enterprise” as a business “at least fifty-one percent of which is owned by United States citizens who are black, Hispanic, Orientals , women, or American Indians , or a business in which at least fifty-one per cent [of the stock is owned by such persons].” (Emphasis added.) 137 Ohio Laws, Part II, 3129. Following passage of the 1977 Act, Section 13 was apparently
interpreted by certain state agencies or actors to restrict bidding on a portion of the
capital improvement contracts to minority businesses only. Thus, certain parties
sued in the Court of Common Pleas of Franklin County, seeking to enjoin such
restrictions and challenging the constitutionality of Section 13. See
Ohio Bldg.
Chapter, AGC v. Jackson
(Sept. 28, 1979), Franklin C.P. Nos. 78CV-05-2343 and
79CV-01-247, unreported. Judge George E. Tyack of the common pleas court, on
the eve of the expiration of the two-year operation of the appropriations measure,
issued a decision upholding the constitutionality of Section 13,
id
. at 5, stating:
“From the evidence submitted in the instant case, the Court fully realizes there are
many factors that affect the ability of the minority groups outlined in Section 13 of
[Am.Sub.H.B. No. 618]. These include problems of financing, ability to obtain
performance bonds, the variable costs of performance bonds, labor problems and,
probably, experience in the contracting field. These factors may well have been a
cause, if not the cause, of the provisions of [Am.Sub.H.B. No. 618].” . at 4.
However, he went on to conclude: “This Court finds
from the evidence submitted
that there exists in the awarding of state contracts a
discrimination against the
minority groups specified
in [Section 13, Am.Sub.H.B. No. 618].
The Court finds
that there is a compelling need to correct this discrimination
.” (Emphasis added.)
. at 5.
[6]
Members of the General Assembly were aware of this decision at
the time the 1980 MBE Act was pending for consideration. Indeed, it appears that
Senator Bowen, the chief sponsor of the set-aside provisions of Am.Sub.H.B. No.
584 (and the chairman of the committee that reported it to the Ohio Senate),
6. We note, in passing, that in
Ohio Contractors Assn. v. Keip
(Dec. 15, 1982), S.D.Ohio No. C-2-
82-446, unreported, reversed (C.A.6, 1983),
circulated copies of that decision to the members of both houses of the General
Assembly while the bill was pending. See
Keip
, S.D.Ohio No. C-2-82-446,
unreported, at 13. See, also,
Keip
,
Franklin C.P. Nos. 78CV-05-2343 and 79CV-01-247, unreported, ODAS had
gathered statistical data from records of past capital-improvement contracts
awarded by the state between 1957 and 1979. The statistical data revealed that
“identifiable minority businesses obtained a very small portion of the prime capital
improvement projects” awarded by the state.
Keip
, S.D.Ohio No. C-2-82-446,
unreported, at 15. “The actual amount in terms of dollar value * * * was
$4,265,797.44 out of a total of $2,004,301,803.33, or roughly 0.21 percent.”
Id
. at
15-16. See, also,
Keip
,
public contracts awarded to minority-owned businesses in Ohio. Statistics revealed
that from 1975 to 1977, minority-owned businesses accounted for approximately
seven percent of all Ohio businesses, but had received less than one-half of one
percent of all state purchase contracts. The task force concluded that minority
businesses were receiving less than one-fourteenth of their proportionate share of
state contracts. In its report, the task force nоted that certain state officials and state
agencies had undertaken efforts to increase minority participation in state
contracting opportunities, but that those efforts had been largely ineffectual. The
task force identified certain needs of minority business enterprises, including the
need for a better method of receiving information on impending public contracts,
the need to overcome bonding barriers, and the need for the state to correct delays
in paying for completed work. The report also discussed the option of a mandatory
set-aside program and noted that witnesses at the public hearings had agreed that
set-asides were necessary to increase minority business participation in state
contracts. In addition to the need for set-asides, the report noted that several
witnesses had also suggested that the state needed to more aggressively encourage
joint business arrangements between minority firms and nonminority firms.
The task force made several recommendations for legislative and
administrative assistance to minority business enterprises, and specifically
recommended, among other things, the adoption of a ten-percent affirmative-action
goal for state purchase contracts for goods, services, and construction. The 1978
task force report was widely circulated and distributed to members of the General
Assembly while the 1980 MBE Act was pending for consideration. See
Keip
,
S.D.Ohio No. C-2-82-446, unreported, at 15. See, also,
Keip
,
Appeals, in reviewing the legislative history of the Act, reached this same conclusion, stating, “While the act did not contain a preamble which stated in so many words that its purpose was to correct past practices by which the state was involved in discrimination against minority contractors its purpose and objective were absolutely clear from the text and the hearings and floor debate which preceded final enactment. In addition, this legislation was considered and adopted against a ‘backdrop’ which must have made the members aware of the problem and the necessity for action.” . at 170. Additionally, the court in Keip went on to state, “When viewed against this ‘backdrop’ there can be no doubt that the members of the Ohio legislature understood the situation which produced the MBE act and the purposes for which it was offered. * * * [I]t is clear from the overwhelming approval of the MBE act that the members [of the General Assembly] accepted the findings of Ohio courts, executive department investigations and earlier studies by committees of the legislature itself.” . at 171. Furthermore, our research indicates that an early version of the bill contained specific language explaining that the legislation was to remedy the past discrimination minority businesses had experienced in state contracting opportunities. However, that language was deleted at some point during the legislative process, presumably because the remedial objectives of the legislation, as finally enacted, were obvious to everyone. Given the evidence that was before the General Assembly when it considered and passed the 1980 MBE Act, we think it clear that the General Assembly had a “strong basis in evidence” for finding that remedial action was necessary to ameliorate the effects of identified racial discrimination in which the state itself had either actively or passively participated. Prior to the enactment of the legislation, the General Assembly and other state governmental entities and officials had examined and had attempted to redress the nearly nonexistent minority participation in public contracting opportunities. The General Assembly knew that these prior efforts had not been sufficient to remedy the problem. The General Assembly was aware of judicial and executive findings of discrimination in state contracting, the state’s involvement and acquiescence in a pattern of discriminatory practices, and the debilitating effects that such discriminatory practices had on the ability of MBEs to compete in the state contracting system. The General Assembly considered the task force report and a vast array of statistical evidence showing a severe numerical imbalance in the amount of business engaged in between the state and minority contractors. The evidence before the General Assembly showing the gross statistical imbalance is precisely the type of evidence that may give rise to an inference of discriminatory exclusion and that may justify a finding that remedial action was necessary. Obviously, the General Assembly’s factfinding process is entitled to a presumption of regularity and deferential review by this court, not blind judicial deference, but deference nonetheless. In Croson , the United States Supreme Court found that the factual
predicate relied on by the city of Richmond in adopting an MBE set-aside program
did not amount to a strong basis in evidence to support the city’s conclusion that
remedial action was necessary.
Id
.,
for a number of reasons. When Ohio’s General Assembly enacted the 1980 MBE program, the General Assembly had a wealth of evidence before it. The evidence considered by the General Assembly included past judicial decisions confirming the existence of discrimination in state contracting and establishing the state’s acquiescence in such discriminatory practices, executive findings of discrimination in state contracting opportunities, administrative findings of the need for affirmative action, testimony of opponents and proponents of minority set-asides, and a host of relevant statistical evidence showing the severe numerical imbalance in the amount of business the state did with minority-owned enterprises. The evidence that was before the General Assembly showed, inter alia , a gross statistical disparity between the number of qualified MBEs in Ohio and the number of contracts awarded to Ohio’s minority businesses . The 1978 task force report indicated, among other things, that minority businesses constituted approximately seven percent of all Ohio businesses, but that minority businesses were receiving less than one-half of one percent of state purchasing contracts. A study by ODAS also indicated a disparity in the general construction contracts awarded to minority businesses, as did a report issued by Legislative Budget Office. In our judgment, this type of relevant statistical data, coupled with all other pieces of the evidentiary mosaic considered by the General Assembly, is precisely the type of probative evidence of identified racial discrimination found lacking in Croson. Croson itself in this regard buttresses our conclusion. Specifically,
we note that in
Keip
, 713 F.2d 167, the United States Sixth Circuit Court of
Appeals, in upholding Ohio’s set-aside program, relied on the 1967 decision in
Ethridge
,
“ ‘societal discrimination,’ an amorphous concept of injury that may be ageless in
its reach into the past,”
Bakke
,
V The trial court and the court of appeals found that Ohio’s MBE
program, as administratively applied to deny appellee’s application for MBE recertification on the basis of race per se , violated the Equal Protection Clause of the Fourteenth Amendment. The trial court and the court of appeals acknowledged that the MBE program was designed to redress past racial discrimination, and recognized that the state’s interest in remedying past discrimination is or may be compelling. Nevertheless, the trial court and the court of appeals concluded that equal protection required participation by every disadvantaged business enterprise in the state regardless of the business owner’s race. In so holding, the courts below essentially ignored the state’s compelling interest in having adopted the MBE program in the first instance, i.e. , to redress the lingering effects of past, documented racial discrimination against the particular minority groups listed in R.C. 122.71(E)(1). The court of appeals’ analysis in this case was similar to the
analysis of the trial court in holding that Ohio’s MBE program and, specifically, the definition of “minority business enterprise” in R.C. 122.71(E)(1) were not narrowly tailored to effectuate a compelling governmental interest. The court of appeals’ majority acknowledged that the MBE program “is designed to remedy past discrimination,” and that remedying past discrimination “may be” a compelling governmental interest. However, the court of appeals’ majority concluded:
“While remedying past discrimination may be a compelling interest, we find it hard to envision a situation in which a race-based classification is narrowly tailored. The MBE program, as defined in R.C. 122.71(E)(1), is not narrowly tailored. The MBE program’s racial classification appears to be based on the presumption that caucasians and other minority groups are not disadvantaged, socially or economically, but that all members of the listed minority groups are socially and economically disadvantaged. The statute is both under-inclusive and over-inclusive. There may be socially and economically disadvantaged business owners who are excluded from the program simply because of their race, and at the same time, there may be business owners who are not socially and economically disadvantaged yet eligible to participate in the program simply because they are among the four enumerated minority groups.” The court of appeals majority construed Adarand , 515 U.S. 200,
completely disregards the state’s compelling interest in apportioning approximate percentages of public contracting opportunities for the benefit of the specific minority groups listed in R.C. 122.71(E)(1). The court of appeals majority thought that the goal of Ohio’s program should “ideally” be to maximize public contracting opportunities for all economically or socially disadvantaged Ohio citizens. However, that is not what Ohio’s MBE program was designed to do. The purpose of the MBE program was not to aid every disadvantaged business enterprise in the state—it was designed and continues to exist to redress past, documented racial discrimination against the particular minority groups listed in R.C. 122.71(E)(1). To hold that members of all races must be allowed to participate in a program that was explicitly designed to redress documented racial discrimination against certain discrete minorities is a non sequitur . As the amici in this case point out: “Permitting all races to participate in a program explicitly designed to remedy discrimination against certain discrete minorities abandons the State’s original compelling interest—erasing the lingering effects of race discrimination.” In our judgment, Ohio’s MBE program is not defective under the narrow-tailoring prong of strict scrutiny simply because the program does not apply to everyone. If the program were to fail for that reason alone, it is difficult to imagine how any program expressly designed to ameliorate documented racial discrimination against certain identifiable minority groups could ever survive strict scrutiny. Moreover, the court of appeals’ majority, in finding it “hard to envision” a situation in which a racial classification could ever be narrowly tailored, apparently subscribed to the very notion that Adarand clearly rejected, i.e ., the notion that strict scrutiny is strict in theory, but fatal in fact. In Adarand , the United States Supreme Court stated:
“Finally, we wish to dispel the notion that strict scrutiny is ‘strict in theory,
but fatal in fact.’ * * * The unhappy persistence of both the practice and the
lingering effects of racial discrimination against minority groups in this country is
an unfortunate reality, and government is
not disqualified
from acting in response
to it. As recently as 1987, for example, every Justice of this Court agreed that the
Alabama Department of Public Safety’s ‘pervasive, systematic, and obstinate
discriminatory conduct’ justified a narrowly tailored race-based remedy. See
United States v. Paradise
,
business enterprise with specific reference to race, is neither impermissibly underinclusive nor impermissibly overinclusive in its application to the facts of this particular case, or, for that matter, in its application in general. Thus, we reject the conclusion of the court of appeals to the contrary. As to the question of underinclusiveness, the fact that the MBE
program does not apply to all races comports with the compelling state interest that
gave rise to the program’s adoption and implementation. R.C. 122.71(E)(1) defines
“minority business enterprise” as business enterprises that are “owned and
controlled by United States citizens, residents of Ohio, who are members of one of
the following economically disadvantaged groups: Blacks, American Indians,
Hispanics, and Orientals.” The information that was considered by the General
Assembly at the time Ohio’s MBE program was first adopted in 1980 included
information concerning the four specific minority groups specified in the definition
quoted immediately above. For instance, the finding of discrimination and the need
for action in
Ohio Bldg. Chapter, AGC
, Franklin C.P. Nos. 78CV-05-2343 and
79CV-01-247, unreported, pertained to the specific minority groups listed in
Section 13, Am.Sub.H.B. No. 618, 137 Ohio Laws, Part II, 3100, 3129—
i.e
.,
the
same
racial minority groups now listed in R.C. 122.71(E)(1)—Blacks, American
Indians, Hispanics, and Orientals. Moreover, if the General Assembly had decided
to randomly pick additional minority groups for inclusion into the MBE program,
such as, for instance, persons of Lebanese ancestry, the MBE program would
almost certainly fail under strict scrutiny. See,
e.g
.,
Croson
,
classification in R.C. 122.71(E)(1) was defectively overinclusive, i.e ., that the MBE program could conceivably bestow a benefit on certain MBEs that could not be justified on the basis of remedying the lingering effects of prior identified discrimination. However, as to the question of overinclusiveness, we do not view appellee’s arguments in this case as even challenging the MBE progrаm on that ground. Appellee’s arguments in this case are that the program is underinclusive. That is, appellee wants the MBE program to be upheld, but with appellee participating in its benefits. Therefore appellee’s only objectives here are to be included in the program. Appellee does argue at one point in its brief that under the state’s application of the program, “a company such as Honda of America qualifies as an MBE only if it can prove 51% Japanese ownership.” However, appellee challenges the program only as it was administratively applied to deny appellee’s application for MBE recertification. Further, there is absolutely no evidence in this case that Ohio’s MBE program is or has been operated in a grossly overinclusive manner. This case is not about Honda of America or whether, in anyone’s wildest imagination, that corporation could ever qualify for participation in Ohio’s MBE program. This is not a case involving any particular award of any particular state contract to any particular business enterprise. Moreover, even if we were to assume that, on the facts of this case, appellee had standing to raise a claim that R.C. 122.71(E) is facially overinclusive, appellee specifically denies having raised any such challenge to the MBE program. In its brief, appellee specifically concedes that “Ritchey Produce never challenged the facial validity of the State’s MBE program.” Thus, under these circumstances, and on the basis of the facts giving rise to this appeal, we seriously question the propriety of the court of appeals’ determination whether the MBE program, as applied in this case , is defectively overinclusive . In any event, the court of appeals’ determination that the racial
classification in R.C. 122.71(E)(1) is impermissibly overinclusive was apparently based upon the same flawed reasoning that drove the court to the conclusion that the program was defectively underinclusive. Therefore, it bears repeating that the purpose of the MBE program was to ameliorate the effects of a pattern of past, documented racial discrimination in which the state had participated to the detriment of the racial or ethnic minority groups listed in R.C. 122.71(E)(1). Contrary to the conclusion reached by the court of appeals, the MBE program is not a program that was designed to benefit all of Ohio’s citizenry. The court of appeals observed that, as a result of the program, “[t]here may be socially and economically disadvantaged business owners who are excluded from the program simply because of their race, and at the same time, there may be business owners who are not socially and economically disadvantaged yet eligible to participate in the program simply because they are among the four enumerated minority groups.” However, given the purposes of Ohio’s MBE program, we believe that this observation simply does not justify the court of appeals’ holding in this case.
{¶ 150}
In assessing the appropriateness of race-conscious remedies, courts
have generally looked to several factors, including “the necessity for the relief and
the efficacy of alternative remedies; the flexibility and duration of the relief,
including the availability of waiver provisions; the relationship of the numerical
goals to the relevant labor market; and the impact of the relief on the rights of third
parties.”
Paradise
,
relief embodied in Ohio’s MBE program. However, we limit ourselves to only the following general observations. First, as outlined in our discussion in Part IV, above, Ohio’s MBE
program was enacted only after a host of earlier efforts designed to increase minority participation in state contracting opportunities had failed to eliminate the effects of racial discrimination in the area of state contracting. See, also, Keip , 713 F.2d at 174 (“The General Assembly had evidence that earlier efforts to increase minority participation in state business by various methods short of those contained in the MBE act, such as ‘goals’ set by executive orders and administrative regulations, had not been successful”). Further, as ODAS correctly points out, the MBE program has continually operated in conjunction with alternative race-neutral measures to increase minority participation in public contracting opportunities, and in conjunction with a host of othеr state-sponsored programs providing “assistance to minority business owners, with no impact whatsoever on non-minority businesses.” Ohio’s MBE program was and continues to be a central, necessary, and indispensable part of a remedial puzzle. It remains a valid remedial and prophylactic device that forms the foundation of the great wall that currently separates Ohio from the discriminatory tendencies of its past in the area of state construction and procurement contracting. Second, Ohio’s MBE program is unquestionably flexible. All set-
aside requirements are to be met “approximately” (see, e.g ., R.C. 123.151[C][1] and 125.081[A]), and, as the state points out, the waiver provisions of the MBE program (see, e.g ., 123.151[C][3] and [4]), and the set-aside requirements have been applied in a flexible manner. Third, the numerical goals of the program have a direct relationship
to Ohio’s contracting market. In
Croson
,
{¶ 155}
Fourth, nonminority contractors are not wholly precluded from
participation in contracts that are set aside for MBEs. For instance, the definition
of “minority business enterprise” in R.C. 122.71(E) encourages legitimate
collaborative partnerships and joint ventures between nonminority contractors and
minority group members. As the court in
Keip
noted, nonminority contractors may
participate in contracts set aside for award to minority business enterprises in a
number of ways, including “by having up to 49% ownership or control of a minority
establishment.” .,
procedures to ensure participation by qualified MBEs only, although the case at bar may not be a prime example of that fact. The facts of this case do demonstrate, however, that complaints of improper certification are taken seriously and that administrative errors in the application of the program can be easily rectified. Administrative definitions also add clarity to the statutory (R.C. 122.71[E][1]) identification of the particular minority groups encompassed in the program. See Ohio Adm.Code 123:2-15-01(A)(6) through (9) (defining “Blacks,” “American Indians,” “Hispanics,” and “Orientals” with particularity). Additionally, the administrative rules provide for careful scrutiny of applications for MBE certification, so that spurious minority-front entities will be identified during the investigative process and will be excluded from the program. Ohio Adm.Code 123:2-15-01. Further, MBE certification may not be granted for a period exceeding one year, and applicants must annually revise their applications and information for purposes of MBE recertification. See, e.g ., Ohio Adm.Code 123:2-15-01(C). This process ensures that only qualified MBEs remain in the program. Sixth, the General Assembly has provided for harsh criminal
penalties to discourage unjust participation in the MBE program. Specifically, anyone who intentionally misrepresents himself or herself as owning, controlling, operating, or participating in a minority business enterprise for purposes of participating in the benefits of the program is guilty of a criminal offense, i.e ., theft by deception. R.C. 123.151(I) and 125.081(F).
{¶ 158}
Seventh, the definition of “minority business enterprise” in R.C.
122.71(E)(1) contains an appropriate geographic limitation for the program,
i.e
.,
MBEs are defined as those businesses that are “owned and controlled by United
States Citizens, residents of Ohio.” Thus, unlike the program struck down in
Croson
,
continuing reassessment and reevaluation. For instance, R.C. 123.151(H) imposes stringent reporting requirements pertaining to the contracting obligations of ODAS and other state agencies, as well as a mechanism to ensure compliance by affected state agencies. Moreover, the program is now and has always been subject to continuing reassessment and review by the General Assembly. The General Assembly has, for example, revisited the provisions of R.C. 123.151 on six separate occasions since 1980. Additionally, recent media accounts from throughout the state indicate that the General Assembly is currently preparing to revisit the MBE program in 1999. Thus, Ohio’s MBE program is obviously not a program that the General Assembly established and then promptly forgot about. Rather, Ohio’s MBE program is a matter that has continually occupied the attention of the legislature ever since the program was first established, and it is certainly a matter that will continue to occupy the attention of the General Assembly for some time to come. Ninth, and finally, the burdens imposed on non-MBEs by virtue of
the set-aside requirements are relatively light. Indeed, with specific reference to appellee, the burden it has been asked to bear as a result of the set-aside provisions of R.C. 125.081(A) has been virtually nonexistent. After all, appellee was mistakenly allowed to participate in the program and has actually benefited from it for quite some time. In any event, there is no question that where remedial race- based state action is necessary to eliminate the effects of past discrimination, innocent persons may be called upon to bear some of the burden of the remedy. See, e.g ., Wygant , 476 U.S. at 280-281, 106 S.Ct. at 1850, 90 L.Ed.2d at 273. Suffice it to say that the burdens placed on those not entitled to participate in the benefits of the MBE program are diffused, to a considerable extent, to a wide group of individuals and entities, and that the burdens are minimal indeed. Additionally, those burdens are merely an incidental consequence of the MBE program, not part of the program’s objective. Accordingly, upon consideration of a host of factors, including the
factors outlined immediately above, we find that Ohio’s MBE program is sufficiently narrowly tailored to pass constitutional muster. Thus, we are satisfied that Ohio’s program need not be invalidated under either prong of the strict scrutiny test formulated by the United States Supreme Court.
VI The rationale for requiring strict judicial scrutiny of all
governmental racial classifications, we are told, is as follows:
“ ‘Absent searching judicial inquiry into the justification for such race-
based measures, there is simply no way of determining what classifications are
“benign” or “remedial” and what classifications are in fact motivated by illegitimate
notions of racial inferiority or simple racial politics. Indeed, the purpose of strict
scrutiny is to “smoke out” illegitimate uses of race by assuring that the legislative
body is pursuing a goal important enough to warrant use of a highly suspect tool.
The test also ensures that the means chosen “fit” this compelling goal so closely
that there is little or no possibility that the motive for the classification was
illegitimate racial prejudice or stereotype.’ ”
Adarand
,
{¶ 163} The classification set forth in R.C. 122.71(E)(1), defining “minority business enterprise” with specific reference to race, was clearly not motivated by illegitimate notions of racial inferiority, illegitimate racial prejudice, or stereotype, or “simple racial politics.” Thus, if the purpose of strict scrutiny really is to smoke out any such illegitimate motivations for a governmental racial classification, we are absolutely convinced that, when all the smoke has cleared, no such illegitimate motivations may be attributed to Ohio’s General Assembly. There is simply no illegitimate use of race that is plainly visible on the facts of this case.
VII ODAS’s hearing examiner found that Ritchey, the sole owner of
appellee Ritchey Produce, was Lebanese and that, therefore, Ritchey did not fit
within the meaning of the term “Orientals” in R.C. 122.71(E)(1) for purposes of
qualifying his business as a “minority business enterprise.” ODAS adopted the
report and recommendation of the hearing examiner and denied appellee’s
application for MBE recertification. The court of appeals majority, having decided
this case as it did, never reached the issue whether a person of Lebanese ancestry
is included within the meaning of term “Orientals” in R.C. 122.71(E)(1). We have
already stated our disagreement with the court of appeals’ conclusion on the
constitutional question. For the reasons that follow, we find that the administrative
order denying appellee’s application for MBE recertification was supported by
reliable, probative, and substantial evidence, and was in accordance with law.
The term “Orientals” in R.C. 122.71(E)(1) is nowhere defined in
the statute. However, Ohio Adm.Code 123:2-15-01(A)(9) defines “Orientals” to
mean “all persons having origins in any of the original people of the Far East,
including China, Japan and Southeast Asia.” ODAS’s hearing examiner looked to
this definition and a host of other definitions and sources, including the common
definitions of the terms “Orient” and “Oriental” that were considered in
DLZ Corp.
,
“Since the issue presented in this case involves statutory construction, specifically, whether the term ‘Orientals’ includes people with origins in India, we are guided by R.C. 1.42, which states, in pertinent part:
“ ‘Words and phrases shall be read in context and construed according to the rules of grammar and common usage.’
“Further, the Supreme Court of Ohio has stated that words left undefined
by statute are to be interpreted by using their usual, common and everyday meaning.
See
State v. S.R
. (1992),
“Webster’s Ninth New Collegiate Dictionary (1987) 832, defines ‘Oriental,’ in pertinent part as: ‘a member of one of the indigenous peoples of the Orient.’ ‘Orient’ is then defined in Webster’s as: ‘ * * * 2 cap : EAST * * *.’ . The term ‘oriental’ is further defined in Webster’s as: ‘ * * * 1 often cap : of, relating to or situated in the Orient * * * 4 cap : of, relating to, or constituting the biogeographic region that includes Asia south and southeast of the Himalayas [and] the Malay archipelago west of Wallace’s line * * *.’ .
“The Random House Dictionary of the English Language (2 Ed.1987) 1365, defines ‘oriental’ as: ‘ * * * 3. ( cap .) Zoo-geog . belonging to a geographical division comprising southern Asia and the Malay Archipelago as far as and including the Philippines, Borneo, and Java. * * * - n . 5. ( usually cap .) a native or inhabitant of the Orient. * * * ’ Id . The Orient is then defined as ‘ * * * 1. the Orient, a. the countries of Asia, esp. East Asia.’ .
“Lastly, Webster’s Third New International Dictionary of the English
Language (1976) 1591, defines ‘oriental’ as: ‘* * * a member of one of the
indigenous peoples of the Orient (as a Chinese, Indian, or Japanese).’ All of these
definitions include within the meaning of the term ‘Oriental’ or ‘the Orient’ either
people with origins in India or, geographically, the Indian subcontinent. Therefore,
a plain reading of the term ‘Oriental’ as used in R.C. 122.71(E)(1) includes those
businesses owned and controlled by persons with origins in the country of India.”
DLZ Corp.
,
referred to in DLZ Corp . and none of the other materials considered by the examiner supported the notion that the use of the term “Orientals” in R.C. 122.71(E)(1) includes people of Lebanese descent. The hearing examiner took notice of the fact that Lebanon is situated on the eastern border of the Mediterranean Sea and is not a country of east or south Asia. The Director of Administrative Services adopted the report and recommendation of the hearing examiner and denied the application for recertification of Ritchey Produce. To support the contention that a person of Lebanese ancestry is
oriental, appellee refers us to the Oxford English Dictionary (2 Ed.1989) for a definition of the term “Orient.” That dictionary defines “Orient” as “1. That region of the heavens in which the sun and other heavenly bodies rise, or the corresponding region of the world, or quarter of the compass; the east. Now poetic or rhet .” . at 929. The term “Orient” is further defined as: “2. That part of the earth’s surface situated to the east of some recognized point of reference; eastern countries, or the eastern part of a country; the East; usually, those countries immediately east of the Mediterranean or of Southern Europe, which to the Romans were ‘the East’, the countries of South-western Asia or of Asia generally * * *; occas., in mod. American use, Europe or the Eastern Hemisphere. Now poetic or literary .” . Appellee also refers us to Judge G. Gary Tyack’s concurring opinion in the court of appeals: “The concept of ‘Orient’ and ‘oriental’ dates at least as far back as ancient Greece. The area to the east of the Greek city-states was the ‘Orient.’ The people who occupied that area were, by definition, ‘oriental.’ ” In his concurrence, Judge Tyack went on to say: “Since modern Lebanon is to the east of Greece, modern Lebanon is situated in the area which traditionally was considered the Orient. Mr. Ritchey’s ancestry would, therefore, be from the Orient, qualifying him and his business for consideration as a Minority Business Enterprise.” To the Romans, to the people of ancient Greece, and to other ancient civilizations and societies, the term “Orient” and “oriental” may have indeed referred to the area of the world that is currently occupied by modern Lebanon. However, we agree with ODAS’s determination that the common, ordinary, and everyday meaning of the term “Orientals,” at least as that term is generally used and understood today, simply does not refer to people of Lebanese ancestry or, geographically, to the country of Lebanon. Accordingly, we find that the term “Orientals,” as that term is used in R.C. 122.71(E)(1), does not include people of Lebanese ancestry. Thus, ODAS’s determination denying appellee’s application for MBE recertification was supported by the evidence and was in accordance with law. Therefore, ODAS’s final adjudication order should be, and hereby is, approved.
VIII We are aware that Judge James L. Graham of the United States
District Court for the Southern District of Ohio, Eastern Division, recently decided, by order dated October 30, 1998, that “Ohio Revised Code Section 123.151 and all rules, regulations and practices promulgated thereunder, which provide for and implement racial or ethnic preference provisions for the awarding of State construction contracts and State construction subcontracts violate the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution.” Associated Gen. Contrs. of Ohio, Inc. v. Drabik (Oct. 30, 1998), S.D.Ohio No. C2- 98-943, unreported, at 1-2, 1998 WL 812241. Additionally, Judge Graham enjoined the defendants in that litigation from “implementing or enforcing the provisions of Ohio Revised Code §123.151 and all rules, regulations and practices promulgated thereunder which provide for racial or ethnic preferences for the awarding of state construction contracts and subcontracts.” . at 2. Judge Graham’s order dealt only with state construction contracts
and subcontracts. In contrast, the case at bar deals with the denial of an application for MBE recertification of a business that was formerly certified to bid on state purchasing contracts for goods and services, i.e ., contracts set aside under R.C. 125.081(A)—not R.C. 123.151. Nevertheless, we recognize that our conclusions herein concerning the constitutionality of Ohio’s program are at odds with the rationale of Judge Graham’s order. In any event, we specifically wish to avoid a direct conflict between the case at bar and the specific requirements of Judge Graham’s order in Associated Gen. Contrs. of Ohio, Inc. Thus, we limit our holding today to the area of state procurement contracting. We do so in the interests of state and federal judicial comity and because the facts of the case at bar are amenable to a limited holding.
IX The United States Supreme Court has looked at governmental
racial classifications with great skepticism and general disfavor, but the court has yet to outlaw the use of benign or remedial race-based measures of the type at issue here. All governmental racial classifications are inherently suspect and thus require the most exacting judicial examination. However, Ohio’s MBE program should be upheld unless it is clearly unconstitutional beyond a reasonable doubt. While there may be some legitimate questions concerning Ohio’s MBE program, and the question might even be a close one, we are not convinced beyond a reasonable
S C doubt that Ohio’s MBE program is unconstitutional. We have reviewed the program under the strict scrutiny test, and we are satisfied that it passes constitutional muster under the United States Supreme Court’s guiding precedents. For all of the foregoing reasons, we hold that the provisions of R.C. 125.081 requiring that approximately fifteen percent of the state’s purchasing contracts be set aside for competitive bidding by minority business enterprises only and the provisions of R.C. 122.71(E) defining “minority business enterprise” with explicit reference to race are constitutional as applied to deny minority-business- enterprise status to a business owned and controlled by a person of Lebanese ancestry. Further, we hold that Ohio’s Minority Business Enterprise Program as it relates to the state’s purchasing contracts is sufficiently narrowly tailored to pass constitutional muster. Accordingly, we reverse the judgment of the court of appeals, vacate the judgment of the trial court, and reinstate the order of ODAS denying appellee’s application for MBE recertification.
Judgment reversed. M OYER , C.J., R ESNICK , F.E. WEENEY , P FEIFER and L UNDBERG S TRATTON , JJ., concur. OOK , J., concurs in judgment.
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